BUSI 101 1st Edition Lecture 12Outline of Last Lecture I. Managerial Accounting Chapter 2 Reviewa. Actual Costing System vs. Normal Costing SystemII. Page 72 in CoursepackIII. Page 71 in CoursepackIV. Managerial Accounting Textbook Problemsa. 2-2b. 2-9Outline of Current Lecture I. Page 84 in Managerial Accounting Textbooka. Problems 2-4A and 2-5AII. Page 174 in Coursepacka. Problems 9,10,13,14,15III. Chapter 4 Notesa. Page 78 in Coursepacki. Traditional versus ABC CostingCurrent LecturePage 84 in the Managerial Accounting Textbook These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.2-4A)a. DepartmentsD1,200,0001,500,00080% of DL CostE1,500,000125,000$12.00/dollars per hourK900,000120,000$7.50/dollars per machine hourb.D E KDM 140,000 126,000 78,000DL 120,000 110,000 37,500Applied OHD96,000 (80%of DL)132,000 (12x11,000)78,000 (7.50x10,400)356,000 368,000 193,500c.Actual OHD Applied OHDD (3000 underapplied) 99,000 96,000 E (8000 overapplied) 124,000 132,000K (1000 overapplied) 79,000 78,000** the entire thing is $4000 underapplied2-5A)Raw Materials Inv. a.560019,225 16,8507975Beg. Materials 5600+Purchases 19,225=Available 24,825-End Materials 7975=Materials Used16,850Work in Processb. 36,000 (Beg. WIP)c. 14950(DM)DL 8800 f. 54150d. 6600 (app. OHD) e. 12200Beg. WIP: 154+155 DM 9050DL 15,000AP OHD 11,25036,000WIP 6600MFG OHD 6600(75% x 8800)156+157+158DM 3800DL 4800 App. OHD 360012200 (end WIP)Finished Goodsg. 5000h. 54150 i. 55150j. 4000Factory Labor12025 k. 12025Manufacturing Overhead1900 (IM)i. 3225 (IL) m. 66001295 (OO) 6370 (overapplied by 230)Old Exam Questions Relating to Chapter 2 MaterialPage 174 in Coursepack9. The most accurate year-end treatment of overapplied factory overhead is to:Answer: C (decrease CGS and appropriate inventory accounts)Explanation:MFG OHDActual Applied6370 6600230MFG OHD 230WIPFG (Prorate is most accurate, however we do not have enough info)CGS(typical treatment is to credit CGS but if you want to be most accurate you credit WIP, FG, and CGS)10. (challenging question)**notice choices a+e are exactly the same (thus they are both wrong, you can already eliminate them)Answer: B (overapplied if your actual hours exceed your estimated hours)Explanation: Est. OHD = $500,000Est. Labor Hours $100,000 =$5/labor hourAssume Actual OHD=Est. OHD (500,000)MFG OHDAct. Applied500,000 510,000 <- To find applied = actual hours (102000x5)12. Answer: A13. Answer: C14. Answer: BExplanation for 13 & 14:II. TMCDM 52,000+DL 116,00+App. OHD 46,000=TMC 214,000III.CGMBeg. WIP 34000+TMC 214000=available 248,000-End WIP 23,000=CGM 225,00015. Answer: BExplanation:III.Beg. WIP 20,000+TMC 315,000=Avail. 335,000-End WIP 15,000=CGM 320,000Chapter 4ABC – Activity Based CostingMultiple Costing DriversPage 78 in Coursepack (Hot Designs Problems)Page 178 in CoursepackQuestions 26-29 summarize chapter 4 very nicelyABC is more accurate (better pricing decisions)- Really just an extension of chapter 226&27 are really chapter 2 questions28&29 are ABC questions26. & 27.Total OHD = 3,200,000 =$80/DL hourTotal DL Hours 40,000Traditional System:Mini A Mini B15,000x80=1200000 25000x80=200000028. & 29.Setup: 800,0001000=$ 800/setupMachining: 1,800,00050,000=$ 36/machine hourInspecting: 600,0001500=400/WSPMini A Mini BS.U. 480,000 320,000864,000 936,000 320,000 280,0001664000 1536000Ex. 4-1.)TOT EST OHDTOT DLCOST=270,000150,000=1.8 (DLCost )Traditional: STD50,000+1.8=90,000CUS100,000+1.8=180,000ABC:Machining: 170,0002,000=85/MHMachine setup: 100,000500=200/SU HourSTD CUSMachine 85,000 85,000Setup 20,000 80,000105,000 165,000Exercise 4-4)Car Truck40,000 10,000x1 hour x3hours=40,000 30,000a.Traditional System:770,00070,000 = 11/hrCar = 440,000Truck = 330,000b.Setup Costs 220,0001000=$ 220/SUAssembly 280,00070,000=$ 4/Labor HourInsp. 270,0001200=$ 225/inspc. Car TruckSU 44,000 176,000Assembly 160,000 120,000Insp. 225,000 247,500226,500