Problem 1
Sunshine Company manufactures diamond-
tipped cutting blades. The total manufacturing
cost of one blade is $1,000, of which $400 is the
conversion cost. The Direct Labor cost of a blade
is one-sixth as large as the direct material cost.
Required:
Determine the amount of factory overhead cost
per blade.
This study source was downloaded by 100000854433417 from CourseHero.com on 11-26-2024 06:34:30 GMT -06:00
Answer Problem 1
TC = DM + DL + OV If DL = 1/6 DM
TC = $1,000 DL = 1/6 x $600
DL + OV = $400 DL = $100
DL = 1/6 DM cost CC = DL + Ov $400 = $100 + ?
$1,000 = $.... + $400 Ov = $300
DM = $600
This study source was downloaded by 100000854433417 from CourseHero.com on 11-26-2024 06:34:30 GMT -06:00
Problem 2
Chianti Company manufactures airbrake systems
for long-haul trucks. The prime cost to produce
one system is $800, the conversion cost is $400,
and the total manufacturing cost is $1,000.
Required:
Determine the cost of Direct Labor per system.
This study source was downloaded by 100000854433417 from CourseHero.com on 11-26-2024 06:34:30 GMT -06:00
Answer Problem 2
X + Y = $800 X = $600
Y + Z = $400 Y = $200
X + Y + Z = $1,000 Z = $200
X = $800- ($400-Z) X+Y+Z = $1,000
X = $400+ Z $600+$200+$200 = $1,000
Z = $400- Y
($400+Z) + Y + ($400-Y) = $1,000
$1,200- Y = $1,000 ; Y = 200
This study source was downloaded by 100000854433417 from CourseHero.com on 11-26-2024 06:34:30 GMT -06:00
Problem 3
Smithson Inc. manufactures wave soldering machines.
The total manufacturing cost of one machine is $3,000,
of which $2,000 is the conversion cost. The direct labor
cost of a machine is half as large as the direct material
cost.
Required:
Determine the amount of factory overhead cost per
machine.
This study source was downloaded by 100000854433417 from CourseHero.com on 11-26-2024 06:34:30 GMT -06:00
Answer Problem 3
DM + DL + OV = $3,000
DL + OV = $2,000
DL = ½ DM; DM = 2DL
OV = $2,000-DL
DL = $2,000-OV
2($2,000-OV) + ($2,000-OV) + OV = $3,000
$6000- 2OV = $3,000
2OV = $3,000
OV = $1,500
This study source was downloaded by 100000854433417 from CourseHero.com on 11-26-2024 06:34:30 GMT -06:00
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