Question: Feldspar Company uses an ABC system to
Feldspar Company uses an ABC system to apply overhead. There are three activity rates:
Setting up $20 per setup
Machining $5.10 per machine hour
Other overhead 80% of direct labor cost
During September, Feldspar worked on three jobs. Data relating to these jobs follow:
During September, Jobs 13-280 and 13-282 were completed and transferred to Finished Goods Inventory. Job 13-280 was sold by the end of the month. Job 13-281 was the only unfinished job at the end of the month.
Required:
1. Calculate the per-unit cost of Jobs 13-280 and 13-282. (Round unit cost to nearest cent.)
2. Compute the ending balance in the work-in-process inventory account.
3. Prepare the journal entries ref lecting the completion of Jobs 13-280 and 13-282 and the sale of Job 13-280 on account. The selling price is 150 percent of cost.
4. Suppose Feldspar has secured contracts for two new jobs in October that have simpler designs and will require fewer setups than average. How can the activity-based rates help the company anticipate costs in October and revenue and income when the new jobs are complete? Identify the data analytic types (descriptive, diagnostic, predictive, or prescriptive) that will help Feldspar answer these questions.
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