MAKING THE CONNECTION
INTEGRATIVE EXERCISES
Part 2
Chapters 5-10
Beawvile Fumitum Corporation soclinors, and lounge chairs Beauvill is locatsd in a
medium-sized community in the eouthosetern part of tho United States. Iris a 7
ipley'es the
community. In fact, the economic wall being af the cernmunity is tied vary stiongly te Beauulle,
operetes sanmil 2 fare plant, end 0 fuenture plantin the same community
The sawmill buys logs from ‘Tha sawmill then processes the lose
grades of lumber fists and secancs, No. { common, No. 2 commen, ard
incured in the mil are common to the four grades of umber. Al four graces of tural
Linitate clant, Tne mil vanstes everything | produces 10 the furniture plant, arr! the guades are bas
2
je completion
ining inventory 20% 40%
Ending nventory 40% 50%
sed stanclard cost shaet for Eabie FB70 (for the Coloring and Boling Department only)
Translerrec.in mater
(28 yarcs @ S10) $3250.00
Other marerials [100 ounces @ $0.20} 20.00
Labor (3 1 hours @ $8) 24.80
Fised overhead (3.1 hours @ $5 4550
Venable overhead (3.1 hours @ 65) 50
Standard cost per uni $325.80
Furniture Plan
Departmental data tbudgeted
Service Departments Producing Departments
General
Receiving Power Maintenence Factory Cutting Assembly
Overhead 450000 $600,000 $300,000 $525,000 $750,902 $375,000
chine hours — = = 80002 15,000
wving orders 3500 9,000
an 1,000 4,000 5,000 10,000
Direct labor hours S = = 39.009 200,000
After some iscussion with the furnkure plant contoller, Gisela decided to use machine hours 19
caloulate the overhead rare for the Cutting Deparment and direct labor hours for the Asserrbhy
Daparimant rate (the Cutting Deparment sas more automated then the Assembly Departmen). AS
part ofher razon, she wanted
lompare the oHocts of plantwide rates and cieparimanta rates on De
st of jobs. She wantad te know i overheas costing could be tho source of the arising problems he
nt overbead at Iz decided to examine
produce 500 sofos, asing'o frequently requested styla
titgrs. The second
he effect of the if
jament procedures, Gis
two prospective jabs, One job, Job ASOD, coul
and Fabre #B70. Bids an this type af job were being lost more frequently te con
(9b, Job 875, would produce 75 spedally designed tecliners. This job involved a new design one
‘ave dificult for the workers to bulls, It imovved some special cutting requrements and an unfarnilarassembly. ft
the costs of
cently, the company st
Job A500:
Direct materials:
Faerie FB70
Lumber No, 1 common}
Other components
Direct Inbor
Cui
partment
mbiy Depart
Machine time:
Cutting Department
fs
fssomaly Depanmen'
Job 075:
Direct mated
Feoric FE/O
u sand seconds
Othe: components
bor
Cutting Department
Assembly Depertment
ie
Cutting Departme
Assembly Deparment
Dire
Required
1. Allocate the jeint mani
each grade. (using the physical unite metho of allaeation, ace t
‘ould the mill use’ Expl
has te tho «alee value 3° aplit off methox
splits
each proposed job f tha mill
culated
ti
Caleulate the amount of unde or
19 the waighracl average mate
5. Assume that th
eaving
id paras
‘emed :0 be wiring mi
Je 0 |0bs, Gisela assembled the following information on the twa jobs
werapplied avarh
loulsts the cost par bo
059 is Nat 3 separste process
1¢ bids on jods of this type. To compu
Oheurs @ $10
7,600 hours @ $8.75
350 machine hours
50 machine hours
26 yards @ $350
2,200 board feet @ $0.12
53.236
70hevre @S10
240 hours @ $8.75
0 mackine hours
15 machin
facturing costs to each grade, enc! eslaulate the enst por board ‘sot for
sing the esleevalus:
What ie tho effect an the coat af
werhoad rate for the Fabric plant,
for the fabne pant,
I: for False FPO.
each fabric. Also,
assume that the yam used for each fabric differs significantly in cost. In this case, would process
\9 be apprepriat
& In the Coloring and Botting Depaamenr, 400,00
duce the output of the period, Using the proposed standare cost sheet, calevate t
1g Department
variance (for other materials ony
variances for the Calonng and Bol
a. Materials pri
bb Materials.
& Laber
oF efficiency variance
period-—FIFO or weigh:
isting the variances, which meshes
cd average? Explain,
for the weaving and patter process? Whal costing approach would you
meng? Deserbe your approach i celal
ounces of other materials
2 the following
ssage variance lfor olher materials only
id yOu Use to camoute the actual autour of the