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X Company began manufacturing operations on January 1. The following information is for the year:
1. X Company began manufacturing operations on January 1. The following information is for the year:
Direct materials purchased
$ 6,984
Direct materials used
$ 5,738
Direct labor
$11,634
As of December 31, all jobs were finished, but there were five jobs that were not sold, with costs totalling $1,434. Cost of Goods Sold for the year was $39,466. What was overhead for the year?
2.X Company has the following estimated costs for the year:
Direct materials
$59,300
Direct labor
28,900
Factory supplies
21,500
Factory maintenance
29,200
Advertising
41,400
Factory rent
48,900
Sales salaries
45,000
Factory insurance
67,500
X Company estimates that direct labor hours for the year will be 1,700, and machines will be operated for 60,000 hours. If overhead is allocated on the basis of direct labor hours, what will the overhead rate be?
3. X Company uses an activity-based costing overhead allocation system. It has identified three activities and three cost drivers. The activities and budgeted costs are as follows:
Activity
Budgeted Cost
Setup
$113,000
Product Testing
$55,000
Machine Maintenance
$61,000
The following cost driver information is available for the company's only two products, A and B:
Cost Driver
Product A
Product B
setup hours
28,600
64,100
tests
52,400
44,000
machine hours
66,300
46,200
How much overhead was allocated to Product B? (round overhead rates to two decimal places)?
Questions 4 and 5 refer to the following information:
X Company has two production departments, A and B. At the start of the year, the following budgeted information is available:
Department A
Overhead
$3,800,000
Direct labor hours
50,000
Machine hours
110,000
Department B
Overhead
$1,900,000
Direct labor hours
40,000
Machine hours
140,000
The following information is for two specific jobs, Job 111 and Job 222, that were completed during the year:
Department A
Department B
Job 111
Direct labor hours
741
174
Machine hours
1,080
860
Job 222
Direct labor hours
345
601
Machine hours
1,220
770
4. Using a plantwide allocation system with direct labor hours as the cost driver, what is the allocation to Job 111 (round overhead rates to two decimal places)?
5. Using a departmental allocation system with direct labor hours as the cost driver in Department A and machine hours as the cost driver in Department B, what is the allocation to Job 111 (round overhead rates to two decimal places)?
6. X Company uses account analysis to estimate total overhead costs for each month. In May, when production was 1,000 units, the plant manager classified each overhead cost item as fixed and variable as follows:
Cost Item
Total Cost
Cost Behavior
Supplies
$29,000
100% variable
Utilities
20,000
10% fixed
Maintenance
20,600
100% fixed
If September production is expected to be 1,160 units, what will variable costs per unit be?
7. X Company uses the high-low method to predict maintenance costs each month, with machine hours as the activity measure. The following past monthly cost and activity information is available:
Month
Cost
Machine Hours
May
$7,096
1,600
June
$12,731
3,900
July
$15,548
5,050
August
$12,854
3,950
If maintenance hours in October are expected to be 4,400, what are total fixed maintenance costs expected to be (round unit costs to two decimal places)?
8. In 2017, X Company had revenue of $217,000 and incurred the following costs:
Direct materials
$36,890
Direct labor [all variable]
19,530
Variable overhead
39,060
Fixed overhead
15,100
Variable selling and administration
8,680
Fixed selling and administration
17,100
If revenue and cost relationships are not expected to change in 2018, what must revenue be in order for X Company to earn $60,000?
9. X Company estimates the following for its three products for 2018:
Product
Units Sold
SP
VC
A
7,750
$33.18
$25.40
B
35,650
10.38
5.63
C
21,550
19.77
8.36
Fixed costs in 2018 are expected to be $720,000. What is the expected weighted average contribution margin per unit in 2018?
10. In 2017, X Company's profits after taxes were $174,000. In 2018, the selling price is expected to be $44.20, the variable cost per unit is expected to be $22.50, and total fixed costs are expected to be $170,000. Assuming a tax rate of 33%, how many units must X Company sell in 2018 in order to earn profit of $189,000?
11. X Company is considering modifying one of its main products next year that would make it more attractive to customers. Financial information for the product for this year was as follows:
Selling price
$9.42
Variable costs per unit
$3.40
Total fixed costs
$10,120
If it modified the product, X Company could increase the selling price by $2.14, and unit sales for the modified product would still be the same as current product unit sales. However, fixed costs would increase to $14,580. At what unit sales level would X Company be indifferent between modifying the product and not modifying it?
Questions 12 and 13 refer to the following information:
X Company is considering buying a part next year that they currently make. This year's production costs for 3,400 units were:
Total
Per-Unit
Direct materials
$10,914
$3.21
Direct labor
10,744
3.16
Variable overhead
15,300
4.50
Fixed overhead
14,620
4.30
Total
$51,578
$15.17
A company has offered to supply this part for $13.26 per unit. If X Company buys the part, $7,895 of the fixed overhead can be avoided. Also if X Company buys the part, it can use the freed-up resources to increase production of another product, resulting in additional contribution margin of $2,400. Production next year is expected to be 3,700 units.
12. If X Company buys the part instead of making it, it will save ?
13. X Company is uncertain what production will be next year. What production level would make X Company indifferent between making and buying the part?
