You are on page 1of 2

Acct 3230 Project One Gooper McVooper is the plant manager for Ferd Snerdly Manufacturing Company.

The plant (factory) produces a product called Snerdly Cleanser. Snerdly Cleanser is manufactured in batches in Department One, and then is transferred to Department Two where it is bottled in half gallon containers, capped and labeled in an assembly line process. Ferd Snerdly Mfg Co uses departmental overhead rates to apply overhead. At the beginning of the year (2014) Gooper requested estimates of total overhead for the year in each department. Based on past overhead costs and the budget for 2014, Gooper was given an estimate of $416,000 for Department One and $525,600 for Department Two. Department One uses direct labor hours (DLH) as the activity over which to apply overhead, but since Department Two is automated, it uses machine hours (MH.) From the budget, Gooper is told that estimated DLH for 2014 in Department One is 20,800 hours. Expected machine hours for the factory are 19,600 but 2,080 of that is for Department One. The average wage rate for direct laborers in Dept One is $12 per hour. At the beginning of March, 2014, Department One had two jobs in process. So far, Job # 3715 has used $3,600 of materials, and used 20 hours of direct labor. Job #3716 has used $3,620 of materials and 19 hours of direct labor. During March both jobs were finished. Neither job needed additional materials, but Job 3715 used an additional 10 hours of direct labor, and Job 3716 used an additional 12 DLH. Each job produced 1,000 gallons of product. The finished gallons were transferred to Department Two. Also during March three jobs were started. Job # 3717 used $3,555 of materials and 32 DLH yielding 940 gallons of product. This job was finished and transferred to Department Two. Job # 3718 used $3,800 of materials and 37 DLH yielding 1,100 gallons of product. This job was also finished and transferred to Department Two. The third job, #3719, was started but not finished in March. At the end of March this job had used $3,000 of direct materials and 14 DLH. Each gallon of cleaner (product) coming out of Department One makes two half-gallon containers of finished product in Department Two. Department Two uses process costing and at the beginning of March had 1,000 units (half gallons) of cleaner in process. These units had incurred $5,200 of direct material cost and $2,589 of transferred in cost. The processing cost, which was only overhead, was applied at an average of 0.6 MH per unit times the predetermined OH rate for Department Two. During the period, units were transferred in from Department One, along with the Department One costs transferred in. Department Two also incurred $39,272 of direct material cost, and applied the overhead rate based on units produced at an average of 0.6 MH per unit.

At the end of March there were 1. What will Gooper report as ending Work in Process for March? c. What is the cost of one unit (one gallon bottle) of product in March? Note: If necessary. 4. For Department Two. Find the departmental predetermined overhead rates for the year for Ferd Snerdly Manufacturing Company. prepare a process costing report for March using average costing. What is the firm’s Cost of Goods Manufactured for March? d. 3. 2. . prepare job cost sheets for each job. What will Gooper report as Beginning Work in Process for March? b. These units were 70% complete for materials and 50% complete for processing (on average. For Department One.) REQUIRED: 1. Answer these questions: a.200 units still in Work in Process in Department Two. round large numbers to nearest dollar and unit costs to nearest cent.