Required information (The Excel worksheet form that appears below is to be used to recreate part of the example relating to Turbo Crafters that appears earlier in the chapter.)
Required information (The Excel worksheet form that appears below is to be used to recreate part of the example relating to Turbo Crafters that appears earlier in the chapter.)
Required information (The Excel worksheet form that appears below is to be used to recreate part of the example relating to Turbo Crafters that appears earlier in the chapter.)
Required information (The Excel worksheet form that appears below is to be used to recreate part of the example relating to Turbo Crafters that appears earlier in the chapter.)
Download the Applying Excel form and enter formulas in all cells that contain question marks.
For example, in cell B13 enter the formula "= B5".
After entering formulas in all of the cells that contained question marks, verify that the dollar amounts match the example in the text.
Check your worksheet by changing the estimated total amount of the allocation base in the Data area to 50,000 machine-hours, keeping all of the other data the same as in the original example. If your worksheet is operating properly, the predetermined overhead rate should now be $6.00 per machine-hour. If you do not get this answer, find the errors in your worksheet and correct them.
Save your completed Applying Excel form to your computer and then upload it here by clicking "Browse." Next, click "Save." You will use this worksheet to answer the questions in Part 2.
CONTINUED INFO FOR IMAGE "ACC PT2"
Turbo Crafters Black & Howell
Actual manufacturing overhead cost $290,000 $130,000
Transcribed Image Text:Turbo Crafters
Black & Howell
Allocation base
Machine-hours
Direct materials cost
Estimated manufacturing overhead cost (a)
$300,000
$120,000
Estimated total amount of the allocation base (b)
75,000 machine-hours
$80,000 direct materials cost
Predetermined overhead rate (a) ÷ (b)
$4 per machine-hour
150% of direct materials cost
Note that when the allocation base is dollars (such as direct materials cost in the case of Black & Howell) the predetermined overhead rate
is expressed as a percentage of the allocation base. When dollars are divided by dollars, the result is a percentage.
Now assume that because of unexpected changes in overhead spending and unit sales, the actual overhead cost incurred and the actual
amount of the allocation base used during the year in each company are as follows:
Turbo Crafters
Black & Howell
Actual manufacturing overhead cost
$290,000
$130,000
Actual total amount of the allocation base
68,000 machine-hours
$90,000 direct materials cost
Given this actual data and each company's predetermined overhead rate, the manufacturing overhead applied to Work in Process
during the year would be computed as follows:
Page 11=
Turbo Crafters
Black & Howell
Predetermined overhead rate (a)
$4 per machine-hour
150% of direct materials cost
Actual total amount of the allocation base (b)
68,000 machine-hours
$90,000 direct materials cost
Manufacturing overhead applied (a) × (b)
$272,000
$135,000
Transcribed Image Text:A
В
C
D
1 Chapter 3: Applying Excel
2
3 Data
4 Allocation base
Machine-hours
5 Estimated manufacturing overhead cost
6 Estimated total amount of the allocation base
7 Actual manufacturing overhead cost
8 Actual total amount of the allocation base
$300,000
75,000 machine-hours
$290,000
68,000 machine-hours
9.
10 Enter a formula into each of the cells marked with a ? below
11
12 Computation of the predetermined overhead rate
13 Estimated manufacturing overhead cost
14 Estimated total amount of the allocation base
?
? machine-hours
15 Predetermined overhead rate
? per machine-hour
16
17 Computation of underapplied or overapplied manufacturing overhead
18 Actual manufacturing overhead cost
19 Manufacturing overhead cost applied to Work in Process during the year:
?
? per machine-hour
? machine-hours
20
Predetermined overhead rate
21
Actual total amount of the allocation base
Manufacturing overhead applied
23 Underapplied (overapplied) manufacturing overhead
22
?
?
24
25
B.
Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.
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