Accounting Paper 4

Instructions (READ CAREFULLY)
This assignment is due by 12pm on March 4, 2011 in the Box inside Wehner 460. No late assignments will be accepted. You have the option to work with 1 partner from any section but feel free to work alone as well. You only need to turn in one copy per group, which must be TYPED in order to receive full credit. Failure to type all information (except for 3a below) will result in a 15 point automatic deduction. Please also display the name(s) and section number(s) for both members of the group. For full points, please also show all your work and sub-calculations right in the body of your assignment, not separately. Finally, there are 4 questions with multiple parts so make sure you answer every question and every part.  
  1. Mason Company uses a job-order cost system and applies manufacturing overhead to jobs using a predetermined overhead rate based on direct-labor dollars. The rate for the current year is 200 percent of direct-labor dollars. This rate was calculated last December and will be used throughout the current year. Mason had one job, No. 150, already in process on August 1 with existing raw materials costs of $2,000 and direct-labor costs of $3,000. During the month of August, raw materials and direct labor added to jobs were as follows:

| No. 150 | No. 151 | No. 152 |
Raw materials | 0 | $4,000 | $1,000 |
Direct labor | $1,500 | $5,000 | $2,500 |

During the month of August, Mason completed Job Nos. 150 and 151. Additional costs actually incurred during the month, were as follows:

Indirect Labor | $8,500 | Insurance on factory | $1,500 |
Utilities, factory | $4,000 | Factory depreciation | $1,000 |
Salary, sales manager | $7,000 | Equipment depreciation | $5,000 |
General administration | $2,300 | Sales commissions | $2,250 |

When overhead variances are material, 10% of the difference is allocated to WIP and 90% is allocated to FG.
Required:
  a. What is the cost driver for applied... [continues]

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