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Assignment Task
Case 1
Martinez Building Pty Ltd is one of the largest manufacturers and marketers of unique, custom-made residential garage doors in Sydney, Australia. It also is a major supplier of industrial and commercial doors, grills and counter shutters for the new-construction, repair and remodel markets. Martinez Building Pty Ltd has developed plans for continued expansion of a new network of services operations that sell, install and service manufactured fireplaces, garage doors and related products.
Martinez Building Pty Ltd job order cost and applies overhead to production on the basis of direct labour cost. In computing a predetermined overhead rate for the year 2022, the company estimated manufacturing overhead to be $24,000,000 and direct labour cost to be $20,000,000. In addition, it developed the following information
Instructions Answer each of the following
a) What are the disadvantages of Martinez Building Pty Ltd if using process costing system?
b) On what basis does Martinez Building Pty Ltd allocate its manufacturing overhead? Compute the predetermined overhead rate for 2022.
c) Explain and compute the amount of the under- or overapplied overhead for 2022.
d) Martinez Building Pty Ltd had balances in the beginning and ending word in process and finished goods account as follows.
Determine the (1) cost of goods manufactured and (2) cost of goods sold for Martinez during 2021. Assume that any under- or overapplied overhead should be included in the cost of goods sold.
e) During 2021, Job G408 was started and completed. Its cost sheet showed a total cost of $100,000 and the company prices its product at 50?ove its cost. What is the price to the customer if the company follows this pricing strategy? Explain the profit to Martinez building Pty Ltd.
Case 2
Australia Industries Pty Ltd manufactures its products through two production departments. Materials are shaped and cut in the machining department and then fitted together in the assembly department. Up to now, Australia Industries Pty Ltd has used a plant-wide application rat to apply overhead using direct labour hours.
Management wants to investigate the use of departmental overhead application rates and has produced the following estimates for your analysis.
Required:
i.Calculate a plant-wide application rate based on direct labour hours.
ii.Calculate departmental application rates based on machine hours in the machining department and direct labour hours in the assembly department.
iii. Explain the difference between plant wide and departmental in budget in Australia Industries Pty Ltd.
particular order required the following operating hours:
Required:
Calculate the total amount of overhead charged to production where:
i.a plant-wide rate is used. ii.a different application rate is used for each department.
iii. Explain the difference between plant wide and departmental in Australia Industries Pty Ltd.
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