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Beauville Furniture Corporation

Product: Sofa, Kursi Malas, dan Kursi Lounge

Operates: Sawmill, Fabric Plant, and Furniture Plant

Sawmill Process:
1 Buy logs from independent producers
2 Process logs into four grades lumbers/ potongan kayu:
first & seconds no. 2 common
no.1 common no. 3 common
3 all four grades of lumber are used by furniture plant and transferred at cost
using trucks for moved to funiture plant
4 the mill also could sell to external customer and selling price is known

Fabric Plant Process:


1 Responsible for producing the fabric that used in furniture plant
2 Product: FB60, FB70, FB80
3 Each product has a line
4 Fabric's production has two process
the weaving and pattern process
the coloring and bolting process
5 Transported by forklift to the furniture plant's receiving department at cost

Furniture Plant Process:


1 Produce orders for customer on special order basis (Q, style, fabric, lumber grade, n pattern)
2 Jobs are large (at least 500 units)
3 The plant has two department: cutting & assembly
In the cutting department:
Fabric and wooden frame components are sized n cut
In assembly:
Takes the individual component and assembly sofa n chair
4 In cutting department, also purchased another component from external suppliers
5 Product diversity causing some distortion
Cost management method:
at mill: using the physical unit method at actual costing system
she also using sales value at split off method

two plants used normal costing system


fabric plant: process costing
furniture plant: job order costing
OH rate based on DL Hours

costing for fabric plant is satisfactory


but she concern about material waste, maybe standard cost system will increase cost efficiency

she'd like to explore the possibility sawmill and fabric plant into profit center and changing the existing pricing policy

Data from last year

Saw mill
Joint Manufacturing Costs: 900000 $

Grade Quantity Produced Price at Split-Off


(board feet) (per 1,000 board foot)

First and second 1,500,000 300


No. 1 Common 3,000,000 225
No. 2 Common 1,875,000 140
No. 3 Common 1,125,000 100
Total 7,500,000

Fabric Plant
Budgeted OH (50% fixed) 1,200,000 $ 10
Practical volume (DL hours) 120,000 hours
Actual OH (50% fixed) 1,150,000 $
Actual hours worked:

Weaving & Pattern Coloring & Bolting Total


Fabric FB60 20000 12000 32000
Fabric FB70 28000 14000 42000
Fabric FB80 26000 18000 44000
Total 74000 44000 118000

Departmental data on Fabric FB70 (actual costs & actual outcomes):


Weaving & Pattern Coloring & Bolting
Beginning inventories:
Units 20,000 yard 400 bolt
Costs:
Transferred in 0$ 100,000 $
Material 80,000 $ 8000 $
Labor 18000 $ 6600 $
Overhead 22000 $ 9000 $

Current Production:
Units started 80,000 ?
Units transferred Out 80,000 3200
Cost:
Transffered in 0 100000
Materials 320000 82000
Labor 208000 99400
Overhead ? ?

Percentage completion:
Beginning inventory 30% 40%
Ending inventory 40% 50%
Proposed standard cost sheet for fabric FB70 (for the coloring & bolting department only)
Q P
Transferred in materials (yards) 25 10 250 $
Other materials (ounces) 100 0.2 20 $
Labor (hours) 3.1 8 24.8 $
Fixed overhead (hours) 3.1 5 15.5 $
Variable overhead (hours) 3.1 5 15.5 $
Standard cost per unit 325.8

Furniture Plant
Departmental Data (budgeted)

Service Departments (in $) Producing Departments (in $)


Maintenanc
Receiving Power e General FactorCutting Assembly
Overhead 450,000 600,000 300,000 525,000 750,000 375,000
Machine hours - - - 60,000 15,000
Receiving orders - - - 13,500 9,000
Square feet 1,000 5,000 4,000 15,000 10,000
DL hours - - - 50,000 200,000

After discussion with Furniture Plant Controller, she decided to use machine hours to calculate the OH rate for the cutting
department & DL hours for the Assembly Department rate

She wanted to know if OH costing could be the source of the pricing problem was experiencing

She decided to examine two prospective jobs


Job A500 could produce 500 sofa, using frequently requested style & fabric FB70. this were frequently being lost

Job B75 would produce 75 specially designed recliners. Involved new design, special cutting requirements, & unfamiliar
assembly. Winning more bids.
Job A500
Q P Total
Direct Materials
Fabric FB70 in bolts 180 350 63000

Lumber (No. 1
Common) in board
feet 20000 0.12 2400
Other Components 26600

Direct Labor
Cutting Department in hours 400 10 4000
Assembly Department in hours 1600 8.75 14000

Machine Time
Cutting Department 350 Machine hours
Assembly Department 50 Machine hours

Job B75
Direct Material
Fabric FB70 in yards 26 350 9100

Lumber (firsts and


seconds) in board feet 2200 0.12 264
Other components 3236

Direct Labor
Cutting Department 70 10 700
Assembly Department 240 8.75 2100

Machine Time
Cutting Department 90 Machine hours
Assembly Department 15 Machine hours
1 a) Physical Units Method

Joint Manufacturing Costs: $ 900,000 --> a

Cost per Board


Allocation Join
Quantity Manufacturing
Grade Produced Cost
(board feet) (dalam $) (dalam $)
b c = (b/total b)*a d = c/b

First and second 1,500,000 180,000 0.12


No. 1 Common 3,000,000 360,000 0.12
No. 2 Common 1,875,000 225,000 0.12
No. 3 Common 1,125,000 135,000 0.12
Total 7,500,000 900,000

b) Sales-Value at Split Off Method

Joint Manufacturing Costs: $ 900,000 --> a

Quantity Allocation Join Cost per


Grade Price at Split-Off Sales Value
Produced Mfc Cost Board

(per 1,000 board


(board feet) foot) (dalam $) (dalam $)
b c = (b/total b)*a d = c/b

First and second 1,500,000 300 450,000,000 270,000 0.18


No. 1 Common 3,000,000 225 675,000,000 405,000 0.135
No. 2 Common 1,875,000 140 262,500,000 157,500 0.084
No. 3 Common 1,125,000 100 112,500,000 67,500 0.06
Total 7,500,000 765 1,500,000,000 900,000
Jika kita bandingkan antara physical unit method dan sales value at splitt off method, terlihat
bahwa harga sales value split off memiliki range harga yang lebih besar daripada physical unit
method.
untuk menentukan dampak dari kedua metode tersebut, dilakukan perbandingan harga sbb:

Job A500 yang menggunakan grade no.1 common dan merupakan produk yang sering kalah
dlm bidding, akan mengalami kenaikan harga sekitar 0,015 per unit
Job B75 yang menggunakan grade first and second dan merupakan produk yg sering menang
dalam bidding, akan mengalami kenaikan harga sekitar 0,06 per unit
Apabila harga per unit semakin ditambah, maka dikhawatirkan produk tersebut akan kalah
saing.

2 Plantwide overhead rate sebagai berikut:


Budgeted OH (50% fixed 1,200,000 $
Practical volume (DL
hours) 120,000 hours
Overhead rate/ DL hour 10

Weaving Coloring & Overhead Rate/ Budgeted


3 & Pattern Bolting Total DL Hours DL Hours Actual Overhead Overhead
Fabric FB60 20,000 12,000 32,000 10 320,000 325,424
Fabric FB70 28,000 14,000 42,000 10 420,000 427,119
Fabric FB80 26,000 18,000 44,000 10 440,000 447,458
Total 74,000 44,000 118,000 1,180,000 1,200,000
Keseluruhan Fabric mengalami overapplied

4 Weaving and Pattern Department:


Physical flow schedule (measured in yards):
Units to account for:
Unit, Awal WIP 20,000
Unit started 80,000
Total units to account for 100,000
Units accounted for
Units completed & transferred out:
Started & completed 60,000
Unit, Awal WIP 20,000 80,000
Unit ending WIP 20,000
Total unit accounted for 100,000

Equivalent units schedule:


Material Conversion Costs
Units completed 80,000 80,000
Ending WIP 20,000 8,000
100,000 88,000

Unit Costs

Material Conversion Costs Total


Material beginning 80,000 80,000
Material Production 320,000 320,000
400,000 400,000
Direct Labor 280,000 280,000
Labor beginning & production 226000 226,000
Overhead beginning & production 22000 22,000
528000 528,000
Unit Cost 4 6 10
Cost of good transferred out 800,000

Coloring and Bolting Department:


Physical flow schedule (measured in bolts):
Units to account for:
Unit, Awal WIP 400
Unit started 3,200
Total units to account for 3,600
Units accounted for
Units completed & transferred out:
Started & completed 2,800
Unit, Awal WIP 400 3,200
Unit ending WIP 400
Total unit accounted for 3,600

Equivalent units schedule:


Transferred in
Material Material Conversion Costs
Units completed 3,200 3,200 3,200
Ending WIP 400 400 200
3,600 3,600 3,400

Unit Costs
Transferred in
Material Material Conversion Costs Total
Transferred in 100,000
Cost form
weaving &
pattern
department 800,000
900,000

Material beginning 8,000 8,000


Material Production 82,000 82,000
90,000 90,000
Direct Labor 140,000 140,000
Labor beginning & production 106000 106,000
Overhead beginning & production 9000 9,000
255,000 255,000
Unit Cost 250 25 75 350
Cost of good transferred out 1,120,000
Berdasarkan perhitungan diatas, didapatkan harga per unit untuk FB70 sebesar $350

5 Apabila process dalam fabric plant, bukan proses yang terpisah, maka lebih baik menggunakan job-
order costing.
Hal ini dikarenakan, job order costing menggunakan perhitungan dalam satu perintah kerja dari awal
sampai dengan akhir proses.