ormation? What further information would you cp 19-2 Job order decision making a
ID: 2579468 • Letter: O
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ormation? What further information would you cp 19-2 Job order decision making and rate deficiencies chas backhoes and grader and bulldozer blades, y uses a job order cost system. Management is bout for construction equipment. The compan concerned about cost performance and evaluates the job cost sheets to Te the cost effectiveness of the operations. To facilitate a comparison, the c 206 (50 backhoe buckets completed in October) was compared with JoD o rn more a r 75 backhoe buckets completed in December. The two job cost shee ts follow: Item: 50 backhoe buckets Direct Materials Quantity 105 630 Direct Materials Price $1,200 Materials: Amount Steel (tons) Steel components (pieces) 4.410 $130,410 Direct Labor Direct Labor Rate $22.50 27.00 18.00 Amount Hours 400 550 180 1,130 Direct labor: Foundry Welding Shipping Total direct labor $ 9,000 14,850 3,240 27,090 Direct Tota Labor Cost Factory Overhead Rate Amount Factory overhead 54,180 200% $27,090 (200% of direct labor dollars) $211,680 $4,233.60 Continued) 50 Unit cost (rounded)Explanation / Answer
Answer 1. Input Quantity per Unit - Job 206 Input Quantity per Unit - Job 228 Steel 2.10 tons 2.60 tons 105 tons / 50 Units 195 tons / 75 Units Foundry Labor 8.00 DLH 10.00 DLH 400 DLH / 50 Units 750 DLH / 75 Units Welding Labor 11.00 DLH 14.00 DLH 550 DLH / 50 Units 1,050 DLH / 75 Units Answer 2. The new raw material is purchased is of inferior quality. Although its cost per ton is less (9.09%), but the tons consumed per unit is increased (23.81%), which increased the cost per unit. Also, the Foundry Labor hours and Welding Labor Hours are increased due to inferior quality of raw material. The above factors increases the overall cost per unit. This can be shown as Under: Job 206 Job 228 Difference Cost per Unit % Increase in Cost Qty reqd. Cost per Unit Qty reqd. Cost per Unit Steel Cost per Unit 2.10 2,520.00 2.60 2,860.00 340.00 13.49% Steel Components 12.60 88.20 12.60 88.20 - 0.00% Total Direct Materials per Unit 2,608.20 2,948.20 340.00 13.04% Foundry Labor 8.00 180.00 10.00 225.00 45.00 25.00% Welding 11.00 297.00 14.00 378.00 81.00 27.27% Shipping 3.60 64.80 5.00 90.00 25.20 38.89% Total Direct Labor per unit 541.80 693.00 151.20 27.91% Factory Overhead - 200% of DL 1,083.60 1,386.00 302.40 27.91% Total Cost per Unit 4,233.60 5,027.20 793.60 18.75%
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