Author Question: Shotter Manufacturing is a small textile manufacturer using machine-hours to calculate the single ... (Read 83 times)

pragya sharda · **on:** Jul 5, 2018

Shotter Manufacturing is a small textile manufacturer using machine-hours to calculate the single indirect-cost rate to allocate manufacturing overhead costs to various jobs contracted during the year.

The following estimates are provided for the coming year for the company and for the jackets to be made for Jackson High School Science Olympiad.

Company Jackson High School Job
Direct materials 25,000 600
Direct manufacturing labor 5,000 150
Manufacturing overhead costs 30,000
Machine-hours (mh) 50,000 mh 800 mh

Required:
a. For Shotter Manufacturing, determine the annual manufacturing overhead cost-allocation rate.
b. Determine the amount of manufacturing overhead costs allocated to the Jackson High School job.
c. Determine the estimated total manufacturing costs for the Jackson High School job.

Question 2

Explain the meaning of: (a) the objectivity concept (b) the unit of measure concept

mirabriestensky · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

Answer:
a. Manufacturing overhead cost-allocation rate = 0.60 per mh
= 30,000/50,000 mh

b. 480 estimated manufacturing overhead costs = 800 mh 0.60 per mh

c. Direct materials 600
Direct manufacturing labor 150
Manufacturing overhead costs 480
Estimated total manufacturing costs 1,230

Answer to Question 2

(a) The objectivity concept requires that the amounts recorded in the accountingrecords be based on objective evidence. In exchanges between a buyer and aseller, both try to get the best price. Only the final agreed-upon amountis objective enough to be recorded in the accounting records.

(b) The unit of measure concept requires that economic data be recorded indollars. Money is a common unit of measurement for entering financial data andpreparing reports.