MIDTERM TEST Question 1 (1) Overhead absorbed to GC using labor hours. a ‘AR = 400,000 / 40,000 = $10/ labor hour Overhead absorbed = 10 300 = $3,000 (2) Overhead absorbed to GCusing BC ETS AO Cost [Supervisor 30,000 Overhead absorbed to GC=180x1=$180 (a)overhead abrorbed to EXusingasc_ C-- 1. O. cost Driver Cost per driver Planner 70.000 250 280 ‘Overhead absorbed to EX= 2805 = $1,400 Question 2 eae (a) Profit statement - Absorption costing // > Period 1 Revenues 98.600 Production cost of sales 76.560 Plus under-absorbed ° Less over-absorbed 0 76.560 Gross profit 22.040 Less fixed non-production OVH 16.800 Net profit i SH, (b} Profit statement - Marginal costing 7. 5 Period 1 98.600 Revenues (ABC Period 2 105.400 81.840 0 870 80.970 24.430 16.800 7.630 Period 2 105.400, ro Units sold x $6.6—~y Variable cost Contribution margin 42.920 45.880. Units sold x$3.7 Fixed overhead 00 eal * Non-production ae am Necpot sea = © Profit difference Cy ne Period 1: Period 2: : ' 290 (marginal higher Changes in number of units x In period 1, number of invent (400 - 0) x2.9= 1,160 | period 2, number of inventor (400 - 300) x 2.9 = 290 OAR = Difference in profit ory increase, therefore, absorption costing wl give a higher profit than marginal costing "Y decrease, therefore, marginal costing will give a higher profit than absorption costing Question 3 Og Lanse 1. The cost of a hard drive installed in a computer. 2. The cost of advertising in the Puget Sound Computer User newspaper. 3. The wages of employees who assemble computers from components, 4. Sales commissions paid to the company's salespeople. 5. The-salary of the assembly shop’s supervisor. 6. The salary of thecompany’s accountant. 7. Depreciation’ on equipment Used.to test assembled computers before release to customers. 8-Rent on the facility in the industrial park ‘material 9 and admin exp rect labor selling and admin exp ‘manufacturing OVH selling and admin exp ‘manufacturing OV ~ selling ond admin exp & z ‘manufacturing OVH |