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Problem 5-46Overhead Application and Job-Order Costing
Heurion Company is a job-order costing firm that uses a plantwide overhead rate based on direct labor hours. Estimated information for the year is as follows:
Heurion worked on five jobs in July. Data are as follows:
By July 31, Jobs 741 and 743 were completed and sold. The remaining jobs were in process.
1. Calculate the plantwide overhead rate for Heurion Company. Round your answer to the nearest cent.$ [removed] per DLH
2. Prepare job-order cost sheets for each job showing all costs through July 31. Round your answers to the nearest dollar, if rounding is required. If an amount box does not require an entry, leave it blank or enter zero (“0”).
Job-Order Cost Sheets
3. Calculate the balance in Work in Process on July 31.$ [removed]
4. Calculate Cost of Goods Sold for July.$ [removed]
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s products. ACME considers these screws to have high value potential due to the amount of money spent to purchase them. ACME could easily make this item, but there are also many suppliers in the market, all of which have the capability to produce the fastener – it is not a unique item. You have received three different bids in response to your Request for Proposal. After some investigation into each company, you discover each supplierâ€s performance across four key performance parameters are as follows: Provide your answers to the following. Remember to show how you came up with your answer! Felder Company Grotto, Inc. Helm Brothers, LLC Price/unit $0.22 $0.25 $0.30 Quality Level 99.73% 99.73% 5000 errors per million producedSix Sigma Delivery on-time 96% on-time 99% on-time 98% on-time Order cycle time 2 weeks 3 weeks 24 hours (1) You estimate that the total cost for ACME to produce the fastener would be $600,000 annually. You know maximum annual production need would be 1,875,000 fasteners. Should ACME consider making this? (2) Given the information above and referring back to the portfolio analysis model, what type of commodity is this, and what type of sourcing strategy should you employ? (3) Assume that you judge the Price/unit and Quality Level criteria to be equally important and that these are about 10% more important than Delivery and Order cycle times. Delivery and Order cycle times have the same importance weight. Using a weighted point evaluation system and scoring on a 1-3 scale, (3 being best, one being the worst) which supplier would you rate the best? (Showing your work here is important!). (4) Based on the data and your answer above, would you choose a single source or multiple sources? Why? (5) Given our previous discussion of LEAN, would you suspect any of the above suppliers to have adopted LEAN philosophies? If so, what leads you to that conclusion?
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