Mountain Peaks applies overhead on the basis of machine hours and reports the following information:BudgetActual$150,00030,000OverheadMachine hoursDirect materialsDirect laborA. What is the predetermined overhead rate?5✓ per machine hourB. How much overhead was applied during the year?135,000✔ machine hours$144,00027,000$210,000$350,000C. Was overhead over- or underapplied, and by what amount?9,000 ✓UnderappliedFeedbackCheck My WorkUse budgeted amounts to calculate the predetermined overhead rate. The amount is then used to determine the overhead applied (along with otoverapplied.D. What is the journal entry to dispose of the over- or underapplied overhead? If an amount box does not require an entry, leave it blank.Cost of Goods Sold18Manufacturing Overhead

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Description: Mountain Peaks applies overhead on the basis of machine hours and reports the following information:BudgetActual$150,00030,000OverheadMachine hoursDirect materialsDirect laborA. What is the predetermined overhead rate?5✓ per machine hourB. How much

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intain Peaks applies overhead on the basis of machine hours and reports the following information: Actual Overhead Machine hours Direct materials Direct labor Feedback Budget $150,000 30,000 Check Mock $144,000 27,000 A. What is the predetermined overhead rate? 5✔ per machine hour B. How much overhead was applied during the year? 135,000 ✓ machine hours C. Was overhead over- or underapplied, and by what amount? Underapplied ✓$ 9,000 ✓ $210,000 $350,000

intain Peaks applies overhead on the basis of machine hours and reports the following information: Actual Overhead Machine hours Direct materials Direct labor Feedback Budget $150,000 30,000 Check Mock $144,000 27,000 A. What is the predetermined overhead rate? 5✔ per machine hour B. How much overhead was applied during the year? 135,000 ✓ machine hours C. Was overhead over- or underapplied, and by what amount? Underapplied ✓$ 9,000 ✓ $210,000 $350,000

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead

Section: Chapter Questions

Problem 16E: Determining Budgeted Overhead The overhead application rate for a company is 10 per unit, made up of...

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A company estimates its manufacturing overhead will be $750,000 for the next year. What is the predetermined overhead rate given the following independent allocation bases? Budgeted direct labor hours: 60,000 Budgeted direct labor expense: $1,500,000 Estimated machine hours: 100,000
Douglas Davis, controller for Marston, Inc., prepared the following budget for manufacturing costs at two different levels of activity for 20X1: During 20X1, Marston worked a total of 80,000 direct labor hours, used 250,000 machine hours, made 32,000 moves, and performed 120 batch inspections. The following actual costs were incurred: Marston applies overhead using rates based on direct labor hours, machine hours, number of moves, and number of batches. The second level of activity (the right column in the preceding table) is the practical level of activity (the available activity for resources acquired in advance of usage) and is used to compute predetermined overhead pool rates. Required: 1. Prepare a performance report for Marstons manufacturing costs in the current year. 2. Assume that one of the products produced by Marston is budgeted to use 10,000 direct labor hours, 15,000 machine hours, and 500 moves and will be produced in five batches. A total of 10,000 units will be produced during the year. Calculate the budgeted unit manufacturing cost. 3. One of Marstons managers said the following: Budgeting at the activity level makes a lot of sense. It really helps us manage costs better. But the previous budget really needs to provide more detailed information. For example, I know that the moving materials activity involves the use of forklifts and operators, and this information is lost when only the total cost of the activity for various levels of output is reported. We have four forklifts, each capable of providing 10,000 moves per year. We lease these forklifts for five years, at 10,000 per year. Furthermore, for our two shifts, we need up to eight operators if we run all four forklifts. Each operator is paid a salary of 30,000 per year. Also, I know that fuel costs about 0.25 per move. Assuming that these are the only three items, expand the detail of the flexible budget for moving materials to reveal the cost of these three resource items for 20,000 moves and 40,000 moves, respectively. Based on these comments, explain how this additional information can help Marston better manage its costs. (Especially consider how activity-based budgeting may provide useful information for non-value-added activities.)
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Business Specialty, Inc., manufactures two staplers: small and regular. The standard quantities of direct labor and direct materials per unit for the year are as follows: The standard price paid per pound of direct materials is 1.60. The standard rate for labor is 8.00. Overhead is applied on the basis of direct labor hours. A plantwide rate is used. Budgeted overhead for the year is as follows: The company expects to work 12,000 direct labor hours during the year; standard overhead rates are computed using this activity level. For every small stapler produced, the company produces two regular staplers. Actual operating data for the year are as follows: a. Units produced: small staplers, 35,000; regular staplers, 70,000. b. Direct materials purchased and used: 56,000 pounds at 1.5513,000 for the small stapler and 43,000 for the regular stapler. There were no beginning or ending direct materials inventories. c. Direct labor: 14,800 hours3,600 hours for the small stapler and 11,200 hours for the regular stapler. Total cost of direct labor: 114,700. d. Variable overhead: 607,500. e. Fixed overhead: 350,000. Required: 1. Prepare a standard cost sheet showing the unit cost for each product. 2. Compute the direct materials price and usage variances for each product. Prepare journal entries to record direct materials activity. 3. Compute the direct labor rate and efficiency variances for each product. Prepare journal entries to record direct labor activity. 4. Compute the variances for fixed and variable overhead. Prepare journal entries to record overhead activity. All variances are closed to Cost of Goods Sold. 5. Assume that you know only the total direct materials used for both products and the total direct labor hours used for both products. Can you compute the total direct materials and direct labor usage variances? Explain.
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Direct labor hours are estimated as 2,000 in Quarter 1; 2,100 in Quarter 2; 1,900 in Quarter 3; and 2,300 in Quarter 4. Prepare a manufacturing overhead budget using the information provided.
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Determining Budgeted Overhead The overhead application rate for a company is 10 per unit, made up of 6 per unit of fixed overhead and 4 per unit of variable overhead. Normal capacity is 10,000 units. In one month there was a favorable flexible budget variance of 2,500. Actual overhead for the month was 110,000 and actual units produced were 13,125. Based on this information, determine the amount of the budgeted overhead for the actual level of production.
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