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Answer
= 1,495
M.Q.V = Standard price ( Standard quantity allowed for actual production – Actual quantity used )
21. Joy Ride Corporation has fully automated production facility in which almost 97 percent of
overhead costs are driven by machine hours. As the company's cost accountant, you have computed
the following overhead variances for May:
The company president is concerned about the variance amounts and has asked you to show her how
the variances were computed and to answer several questions.Budgeted fixed overhead for the month
is 500,000 the predetermined variable and fixed overhead rates are respectively 10,and 20 per
machine hour.Budgeted capacity of 10,000.
a. Using the four variances approach prepares an overhead analysis in much detail as possible.
(500000/20)
b. What is the standard number of machine hours allowed for each unit of output?
24500 hours
22440
$3000 F
e. How would the overhead variances be closed if the three variance approach was used?
25000-22440 x 20 = 51200 UF
Efficiency variance
24500-22440 x 30 = 61800 f
17.
In one joint process, Hardahl Chemical produces three joint products and one by -product. The
following information is available for September 2008:
Product - Gallons - Sales Value at Split off per gallon- Cost after Split-Off - Final Selling price
JP-4539 4,000 $12 $3 21
JP-4587 16,000 $8 5 14
Jp-4591 12,000 15 2 19
B.How much additional profit could the company have generated in 2008 if it had made optimal
decision at split-off?
Optimal sales decision
Candied Apples 642000
Apple Jelly 706000
Apple Jam 255000
1603000
Less sales at NRV 1551000
More profit would be 52000
27. Your employer engages in numerous joint processes that produce significant quantities and types
of by-product. You have been asked to give a report to a management on the best way to account for
by-product. Develop a set of criteria for making such a choice and provide reasons for each criterion
selected. On the basis of your criteria, along with additional assumptions you wish to provide about
the nature of the company you worked for, recommend a particular method of accounting for by-
product and explain why you consider it to be better than alternatives
By product has relatively low sales value as compare to main products therefore it is
not preferred to allocate joint cost as done in the case of main product. Rather
doing this the following approached may be used .
The use of the above method is depending on the sales value of by product, if the
sales value of by product is negligible say 5% of total cost then it is preferred to use
1st three methods, otherwise if it is on higher side then it is recommended to use
last method.
When I was working for a towel manufacturing industry and every order was
different form each other and small pieces of towel as duster were being produced
as by product, we were ignoring the by product and treating sale of by product as
other income.