QUESTION #1 Clear View is a manufacturer of custom windows and uses a job-costing system at its Orlando, FL plant. The plant has a machining department and a finishing department. Clear View uses normal costing with two direct-cost categories (direct materials and direct manufacturing labor) and two manufacturing overhead cost pools (the machining department with machine-hours as the allocation base and the finishing department with direct manufacturing labor costs as the allocation base). The 2014 budget for the plant is as follows: Machining Department Finishing Department Manufacturing overhead costs $9,065,000 $8,181,000 Direct manufacturing labor costs $ 970,000 $4,050,000 Direct manufacturing labor-hours 36,000 155,000 Machine-hours 185,000 37,000 ⦁ Prepare an overview diagram of Clear View's job-costing system. ⦁ What is the budgeted manufacturing overhead rate in the machining department? In the finishing department? ⦁ During the month of January, the job-cost record for Job 431 shows the following: Machining Department Finishing Department Direct materials used $13,000 $ 5,000 Direct manufacturing labor costs $ 900 $ 1,250 Direct manufacturing labor-hours 20 70 Machine-hours 140 20 Compute the total manufacturing overhead cost allocated to Job 431. ⦁ Assuming that Job 431 consisted of 300 units of product, what is the cost per unit? ⦁ Amounts at the end of 2014 are as follows: Machining Department Finishing Department Manufacturing overhead incurred $10,000,000 $7,982,000 Direct manufacturing labor costs $ 1,030,000 $4,100,000 Machine-hours 200,000 34,000 Compute the under- or overallocated manufacturing overhead for each department and for the Dover plant as a whole. ⦁ Why might Clear View use two different manufacturing overhead cost pools in its job-costing system? Use this template to complete your work. Save your assignment as a Microsoft Excel spreadsheet. Cost Accounting Project Part I Template Project Part I 1 An overview of the job-costing system is: 2 Budgeted manufacturing overhead divided by allocation base: a. Machining Department: b. Finishing Department: Show work 3 Machining Department overhead Finishing Department overhead Total manufacturing overhead allocated $0 4 Total costs of Job 431: Direct costs: Show work Direct materials Machining Department Finishing Department Direct manufacturing labor Machining Department Finishing Department 0 Indirect costs: Machining Department overhead Finishing Department overhead 0 Total costs $0 The per-unit product cost of Job 431 is 5 Machining Finishing Manufacturing overhead incurred (actual) Manufacturing overhead allocated Machining Finishing Underallocated manufacturing overhead Overallocated manufacturing overhead Total overallocated overhead = 6 QUESTION #2 Because of the availability of equipment and labor, Clear View has started making mass market picture frames at its Orlando, Florida plant with the excess capacity. Clear View has determined that process costing would be most appropriate for this product. Management wants to know the differences between using the Weighted Average and FIFO methods Every picture frame passes through two departments: the assembly department and the finishing department. This problem focuses on the assembly department. The process-costing system at Clear View has a single direct-cost category (direct materials) and a single indirect-cost category (conversion costs). Direct materials are added when the assembly department process is 10% complete. Conversion costs are added evenly during the assembly department's process. Consider the following data for the assembly department in April 2014: ⦁ Degree of completion: direct materials, 100%; conversion costs, 40%. ⦁ Degree of completion: direct materials, 100%; conversion costs, 15%. ⦁ Summarize the total assembly department costs for April 2014, and assign them to units completed (and transferred out) and to units in ending work in process using the weighted average method. ⦁ What issues should a manager focus on when reviewing the equivalent units calculation? ⦁ Summarize the total assembly department costs for April 2014, and assign them to units completed (and transferred out) and to units in ending work in process using the FIFO method. ⦁ Explain any difference between the cost of work completed and transferred out and the cost of ending work in process in the assembly department under the weighted-average method and the FIFO method. Should Clear View's managers choose the weighted-average method or the FIFO method? Explain briefly. Submit your completed assignment to the drop box below. Please check the Course Calendar for specific due dates. Use this template to complete your work. Save your assignment as a Microsoft Excel spreadsheet. Project Part II Section I 1 Summarize the Flow of Physical Units and Compute Output in Equivalent Units; Weighted-Average Method of Process Costing, Assembly Department of Clear View for April 2014. Equivalent Units Physical Direct Conversion Flow of Production Units Materials Costs Work in process, beginning Started during current period To account for Completed and transferred out during current period Work in process, ending Accounted for Equivalent units of work done to date Direct materials = Conversion costs = Total Production Direct Conversion Costs Materials Costs Work in process, beginning Costs added in current period Total costs to account for Costs incurred to date equivalent units of work done Cost per equivalent unit Assignment of costs: Completed and transferred out Work in process, ending Total costs accounted for 2 Project Part II Section 2 3 FIFO Method Equivalent Units Physical Direct Conversion Flow of Production Units Materials Costs Work in process, beginning Started during current period To account for Completed and transferred out Started and Completed Work in process, ending Accounted for Equivalent units of work done to date Total Production Direct Conversion Costs Materials Costs Work in process, beginning Costs added in current period Total costs to account for Costs added in current period Equivalent Units from row 65 Cost per Equivalent Unit Assignment of costs: Completed and transferred out : WIP Beginning Inventory Costs added to Beginning WIP Total from Beginning Inventory Started and Completed Total WIP and Transferred Out Work in process, ending Total costs accounted for The following table summarizes the costs assigned to units completed and those still in process under the weighted-average and FIFO process-costing methods Weighted Average FIFO Difference Cost of units completed and transferred out Work in process, ending Total costs accounted for 4 Explain differences QUESTION #3 Clear's Custom Window division has been purchasing a certain window components from Duwee, Cheatim & How Company. However it was determined that it can use one of the frames from the Framing division. The Framing Division, which is operating at capacity, incurs an incremental manufacturing cost of $65 per frame. The Picture Framing Division can sell all its output to the outside market at a price of $100 per frame, after incurring a variable marketing and distribution cost of $8 per frame. If the Window division purchases frames from Duwee at a price of $100 per frame, it will incur a variable purchasing cost of $7 per frame. Clear View's division managers can act autonomously to maximize their own division's operating income. ⦁ What is the minimum transfer price at which the Frame manager would be willing to sell frames to the Window Division? ⦁ What is the maximum transfer price at which the Window manager would be willing to purchase frames from the Framing Division? ⦁ Now suppose that the Framing Division can sell only 70% of its output capacity of 20,000 frames per month on the open market. Capacity cannot be reduced in the short run. The Windows Division can assemble and sell more than 20,000 windows per month. ⦁ What is the minimum transfer price at which the Framing manager would be willing to sell frames to the Windows Division? ⦁ From the point of view of Clear View's management, how much of the Framing Division's output should be transferred to the Window Division? ⦁ If Clear View mandates the Framing and Windows managers to "split the difference" on the minimum and maximum transfer prices they would be willing to negotiate over, what would be the resulting transfer price? Does this price achieve the outcome desired in requirement 3b? Use this template to complete your work. Submit your completed assignment to the drop box below. Please check the Course Calendar for specific due dates. Save your assignment as a Microsoft Excel spreadsheet. Cost Accounting Project Part III 1 2 3a. 3b. 3c.