Please answer the following based on the given information 8

8) 6 points) ABC Job Costing: Use the table below to complete the requirements here. Since the sales revenue has already been billed to each customer based on the Traditional system, the revenue for each job will be unchanged. Complete the Sales Revenue for each job in the ABC Job Summary below a) b) Direct Material and Direct Labor will also remain the same for each job. Complete the DM and DL for each job in the table below c) d) e) f) Include the overhead amounts calculated for each job in 8) in the table below Determine the total job costs by adding DM, DL and OH for each job. Calculate the Gross Margin by subtracting total job costs from Sales Revenue. Calculate Gross Margin percent as gross margin divided by sales revenue. such that revenue can be allocated. This Report represents a job summary based on \"ABC\" method of allocating Overhead. Superior Company Job Report ABC Ref JV28 BY92 ZF14 Sales Revenue Job Costs: 8c) 8b) 8b) 8d) Applied Overhead Direct Material Direct Labor Total Job Costs Gross Margin Gross Margin % (2 points) Use the ABC job summary you completed to answer the following questions. Make sure your explanations are 10 to 20 words and are in complete sentences. 9) a) Which job should management be most concerned about costs? Why? b) Which job should management want to produce and sell more of? Why?

Solution

g) Downside of traditionl costing:

Example 1: Overhead allocation under traditional costing is based on direct labor costs. The accuracy of the predetermined rate is lessas compared to ABC. If you see the Job ZF14-S, under traditional costing the overapplied is quite less than what ia applied under ABC. This might result in undervaluation of cost.

Example 2: Sales price under traditional costing is less than under ABC. Though the margin is ame, due to less accuracy of traditional costing, if the overhead is greatly underapplied this might result in loss as markup is based on cost .

8	Superior Company
	Job Report -ABC
		Ref	JV28	BY92	ZF14
	Sales Revenue	8a)	438800	131640	241340
	Job Costs:
	Applied Overhead	8c)	143866	33611	62672
	Direct Material	8b)	113200	23960	62260
	Direct Labor	8b)	24500	12600	14000
	Total Job Costs (8c+8b)	8d)	281566	70171	138932
	Gross Margin (8a-8d)	8e)	157234	61469	102408
	Gross Margin % (8e/8a)	8f)	35.83%	46.69%	42.43%
9a)	Management should be concerned about Job JV28 with regards to cost as is has high manufacturing costs resulting in low gross margin
b)	Management should produce more of ZF14 as it has the highest gross margin
			JV28	BY92	ZF14
		Per unit cost	Units	Cost	Units	Cost	Units	Cost
	Support	19.92	1500	29880	200	3984	420	8366
	Batch setups	214.19	40	8568	23	4926	11	2356
	Product Sustaining	1043.43	20	20869	14	14608	8	8347
	Inspection	22.13	220	4869	60	1328	80	1770
	General Factory	9.96	8000	79680	880	8765	4200	41832
	Total Overhead applied			143865		33611		62672