Problem 3-23 Job-Order vs Process Costing For each of the following companies, indicate whether job-order or process costing is more appropriate 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 = $𝟏𝟎𝟎,𝟎𝟎𝟎+[($.𝟏𝟎)𝑿(𝟐𝟎𝟎,𝟎𝟎𝟎) $𝟐𝟎𝟎,𝟎𝟎𝟎 = $0.60 per chicken At 300,000 Chicken Volume: = $𝟏𝟎𝟎,𝟎𝟎𝟎+[($.𝟏𝟎)𝑿(𝟑𝟎𝟎,𝟎𝟎𝟎) $𝟑𝟎𝟎,𝟎𝟎𝟎 = $.4333 per chicken At 400,000 Chicken Volume: = $𝟏𝟎𝟎,𝟎𝟎𝟎+[($.𝟏𝟎)𝑿(𝟒𝟎𝟎,𝟎𝟎𝟎) $𝟒𝟎𝟎,𝟎𝟎𝟎 = $.35 per chicken 2. Does the predetermined overhead rate change in proportion to the change in predicted production? Why? Predetermined overhead rate changes when volume has increased by 100%, from 200,00 to 300,000 chickens, then decline in the overhead rate is 27.78% [($.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].