Please answer the following based on the given information (8,9,10,11) 8) 6 poin
ID: 2413285 • Letter: P
Question
Please answer the following based on the given information (8,9,10,11)
8) 6 points) ABC Job Costing: Use the table below to complete the requirements here. Since the sales revenue has already been billed to each customer based on the Traditional system, the revenue for each job will be unchanged. Complete the Sales Revenue for each job in the ABC Job Summary below a) b) Direct Material and Direct Labor will also remain the same for each job. Complete the DM and DL for each job in the table below c) d) e) f) Include the overhead amounts calculated for each job in 8) in the table below Determine the total job costs by adding DM, DL and OH for each job. Calculate the Gross Margin by subtracting total job costs from Sales Revenue. Calculate Gross Margin percent as gross margin divided by sales revenue. such that revenue can be allocated. This Report represents a job summary based on "ABC" method of allocating Overhead. Superior Company Job Report ABC Ref JV28 BY92 ZF14 Sales Revenue Job Costs: 8c) 8b) 8b) 8d) Applied Overhead Direct Material Direct Labor Total Job Costs Gross Margin Gross Margin % (2 points) Use the ABC job summary you completed to answer the following questions. Make sure your explanations are 10 to 20 words and are in complete sentences. 9) a) Which job should management be most concerned about costs? Why? b) Which job should management want to produce and sell more of? Why?
Explanation / Answer
g) Downside of traditionl costing:
Example 1: Overhead allocation under traditional costing is based on direct labor costs. The accuracy of the predetermined rate is lessas compared to ABC. If you see the Job ZF14-S, under traditional costing the overapplied is quite less than what ia applied under ABC. This might result in undervaluation of cost.
Example 2: Sales price under traditional costing is less than under ABC. Though the margin is ame, due to less accuracy of traditional costing, if the overhead is greatly underapplied this might result in loss as markup is based on cost .
8 Superior Company Job Report -ABC Ref JV28 BY92 ZF14 Sales Revenue 8a) 438800 131640 241340 Job Costs: Applied Overhead 8c) 143866 33611 62672 Direct Material 8b) 113200 23960 62260 Direct Labor 8b) 24500 12600 14000 Total Job Costs (8c+8b) 8d) 281566 70171 138932 Gross Margin (8a-8d) 8e) 157234 61469 102408 Gross Margin % (8e/8a) 8f) 35.83% 46.69% 42.43% 9a) Management should be concerned about Job JV28 with regards to cost as is has high manufacturing costs resulting in low gross margin b) Management should produce more of ZF14 as it has the highest gross margin JV28 BY92 ZF14 Per unit cost Units Cost Units Cost Units Cost Support 19.92 1500 29880 200 3984 420 8366 Batch setups 214.19 40 8568 23 4926 11 2356 Product Sustaining 1043.43 20 20869 14 14608 8 8347 Inspection 22.13 220 4869 60 1328 80 1770 General Factory 9.96 8000 79680 880 8765 4200 41832 Total Overhead applied 143865 33611 62672