Ex 19-16 decision making with job order costs Raneri Trophies Inc. uses a job or
ID: 2552967 • Letter: E
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Ex 19-16 decision making with job order costs Raneri Trophies Inc. uses a job order cost system for determining the cost to manufacture award products (plaques and trophies). Among the company’s products is an engraved plaque that is awarded to participants who complete a training program at a local business. The company sells the plaques to the local business for $80 each. Why did the cost per plaque increase from $60 to $68? EX 19-16 Decision making with job order costs Raneri Trophies Inc. uses a job order cost system for determining the cost to manufacture award products (plaques and trophies). Among the company's products is an engraved plaque that is awarded to participants who complete a training program at a local busi- ness. The company sells the plaques to the local business for $80 each OBJ:3 Each plaque has a brass plate engraved with the name of the participant. En graving requires approximately 30 minutes per name. Improperly engraved names must be redone. The plate is screwed to a walnut backboard. This assembly takes approximately 15 minutes per unit. Improper assembly must be redone using a new walnut backboard. (Continued)Explanation / Answer
Why did cost per plaque increase from 60-68.
in this case product is shipped in 30 units and before stated that if any product incorrectly engraved needs to engraved again as well as if incorrect scrwed need to use entire material again
therefore labour and direct cost are being charged for 34 units and actual shipped units is 30 that means in this job labour incorrectly engraved and scrwed 4 units therefor cost of 4 units is being absorbed by balance 30 units and per unit cost is encreased by 8$ from 60 to 68.
2.Improvement Recomandation
as per standard practices if a company produces or provide services different type of products then it should use job costing system, in which all costs related to particular job is charged on the same jobs costing.
in job costing overheads are are allocated on the basis of a pre determind rate and at the end of period that may be underabsorbed or overabsorbed postion from actual data.
since company providing similar type of products labour therefore it should use process cost which allocates entire overheads upon total quantity produced
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