Uploaded by William Rivera

Assigment 3.1

Problem 3-23 Job-Order vs Process Costing
For each of the following companies, indicate whether job-order or process costing is more
1. Manufacturer of swimming pool chemicals.
 Companies that make chemicals use process costing to count the batches.
2. Manufacturer of custom hot tubs and spas.
 Job orders are used, and cost is allocated to each job.
3. Architectural firm.
 Job order costing is used by the firm as service is provided in different contracts.
4. Manufacturer of ceramic tile.
 Process costing.
5. Producer of yogurt.
 Process costing
6. Manufacturer of custom tool sheds.
 Process costing
7. Manufacturer of papers clips.
 Process costing as clips are created on batches.
8. Engineering consulting firm.
 Process costing for contracts
9. Manufacturer of balloons.
 They use Process costing
10. Manufacturer of custom emergency rescue vehicles
 Process costing because they are made on batches.
Problem 3-24 Fixed and Variable Costs; Overhead Rate; Agribusiness
The controller for Tender Bird Poultry, Inc estimates that the company’s fixed overhead is
$100,000 per year. She also has determined that the variable overhead is approximately
$.10 per chicken raised and sold. Since the firm has a single product, overhead is applied
based on output units, chickens raised and sold.
1. Calculate the predetermined overhead rate under each of the following output
predictions 200,000 chickens 300,000 chickens, and 400,000 chickens.
Predetermined overhead rate =
At 200,000 Chicken Volume:
𝑭𝒊𝒙𝒆𝒅 𝒐𝒗𝒆𝒓𝒉𝒆𝒂𝒅+ 𝑽𝒂𝒓𝒊𝒃𝒍𝒆 𝒐𝒗𝒆𝒓𝒉𝒆𝒂𝒅
𝑩𝒖𝒅𝒈𝒆𝒕𝒆𝒅 𝑷𝒓𝒐𝒅𝒖𝒄𝒕𝒊𝒐𝒏 𝑽𝒐𝒍𝒖𝒎𝒆
= $0.60 per chicken
At 300,000 Chicken Volume:
= $.4333 per chicken
At 400,000 Chicken Volume:
= $.35 per chicken
2. Does the predetermined overhead rate change in proportion to the change in
predicted production? Why?
Predetermined overhead rate changes when volume has increased by 100%, from
200,00 to 300,000 chickens, then decline in the overhead rate is 27.78% [($.60$.4333)/$.60]. When volume has increased by 50% ,from 300,000 to 400,000
chickens, the decline in the overhead rate is 19.22% [($.4333-$.35)/$.4333].