3 The predetermined overhead rate for Foster, Incorporated is based on estimated direct labor costs of $400,000 and estimated factoryoverhead of $500,000. Actual costs incurred were:$ 240,000410,00055,000125,00055,000170,00015,00035,000Advertising62,500Factory equipment rental 110,000Direct materialsDirect laborIndirect materialsIndirect laborSales commissionsFactory depreciationProperty taxes, factoryFactory utilities(a) Calculate the predetermined overhead rate and calculate the overhead applied during the year.(b) Prepare the journal entry to eliminate the over- or underapplied overhead, assuming that it is not material in amount.Edit Format Table

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Description: 3 The predetermined overhead rate for Foster, Incorporated is based on estimated direct labor costs of $400,000 and estimated factoryoverhead of $500,000. Actual costs incurred were:$ 240,000410,00055,000125,00055,000170,00015,00035,000Advertising62,

The overhead allocation is a method of allocating indirect costs to the goods produced. It can be…

Business

Accounting

The predetermined overhead rate for Foster, Incorporated is based on estimated direct labor costs of $400,000 and estimated factory overhead of $500,000. Actual costs incurred were: Direct materials $ 240,000 Direct labor 410,000 Indirect materials 55,000 Indirect labor 125,000 Sales commissions 55,000 Factory depreciation 170,000 Property taxes, factory 15,000 Factory utilities 35,000 Advertising 62,500 Factory equipment rental 110,000 (a) Calculate the predetermined overhead rate and calculate the overhead applied during the year. (b) Prepare the journal entry to eliminate the over- or underapplied overhead, assuming that it is not material in amount.

The predetermined overhead rate for Foster, Incorporated is based on estimated direct labor costs of $400,000 and estimated factory overhead of $500,000. Actual costs incurred were: Direct materials $ 240,000 Direct labor 410,000 Indirect materials 55,000 Indirect labor 125,000 Sales commissions 55,000 Factory depreciation 170,000 Property taxes, factory 15,000 Factory utilities 35,000 Advertising 62,500 Factory equipment rental 110,000 (a) Calculate the predetermined overhead rate and calculate the overhead applied during the year. (b) Prepare the journal entry to eliminate the over- or underapplied overhead, assuming that it is not material in amount.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 30P: Primera Company produces two products and uses a predetermined overhead rate to apply overhead....

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Steeler Towel Company estimates its overhead to be $250,000. It expects to have 100,000 direct labor hours costing $2,500,000 in labor and utilizing 12,500 machine hours. Calculate the predetermined overhead rate using: A. Direct labor hours B. Direct labor dollars C. Machine hours
Green Bay Cheese Company estimates its overhead to be $375,000. It expects to have 125,000 direct labor hours costing $1,500,000 in labor and utilizing 15,000 machine hours. Calculate the predetermined overhead rate using: A. Direct labor hours B. Direct labor dollars C. Machine hours
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The cost accountant for River Rock Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning February 1 would be 3,150,000, and total direct labor costs would be 1,800,000. During February, the actual direct labor cost totalled 160,000, and factory overhead cost incurred totaled 283,900. a. What is the predetermined factory overhead rate based on direct labor cost? b. Journalize the entry to apply factory overhead to production for February. c. What is the February 28 balance of the account Factory OverheadBlending Department? d. Does the balance in part (c) represent over- or underapplied factory overhead?
Rulers Company is a neon sign company that estimated overhead will be $60,000, consisting of 1,500 machine hours. The cost to make Job 416 is $95 in neon, 15 hours of labor at $13 per hour, and five machine hours. During the month, it incurs $95 in indirect material cost, $130 in administrative labor, $320 in utilities, and $350 in depreciation expense. What is the predetermined overhead rate if machine hours are considered the cost driver? What is the cost of Job 416? What is the overhead incurred during the month?
During the year, a company purchased raw materials of $77,321, and incurred direct labor costs of $125,900. Overhead is applied at the rate of 75% of the direct labor cost. These are the inventory balances: Compute the cost of materials used in production, the cost of goods manufactured, and the cost of goods sold.
Baldwin Printing Company uses a job order cost system and applies overhead based on machine hours. A total of 150,000 machine hours have been budgeted for the year. During the year, an order for 1,000 units was completed and incurred the following: The accountant computed the inventory cost of this order to be 4.30 per unit. The annual budgeted overhead in dollars was: a. 577,500. b. 600,000. c. 645,000. d. 660,000.
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Chester Company provided information on overhead for its three producing departments as follows: Overhead is applied on the basis of machine hours in Fabricating and direct labor hours in Assembly and in Finishing. Job #13-198 had total prime cost of 6,700. The job took 40 machine hours in Fabricating, 100 direct labor hours in Assembly, and 20 direct labor hours in Finishing. What is the total cost of Job# 13-198? a. 6,700.00 b. 1,523.20 c. 8,223.20 d. 7,383.20
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Determining job costcalculation of predetermined rate for applying overhead by direct labor cost and direct labor hour methods Beemer Products Inc. has its factory divided into three departments, with individual factory overhead rates for each department. In each department, all the operations are sufficiently alike for the department to be regarded as a cost center. The estimated monthly factory overhead for the departments is as follows: Forming, 64,000; Shaping, 36,000; and Finishing, 10,080. The estimated production data include the following: The job cost ledger shows the following data for X6, which was completed during the month: Required: Determine the cost of X6. Assume that the factory overhead is applied to production orders, based on the following: 1. Direct labor cost 2. Direct labor hours (Hint: You must first determine overhead rates for each department, rounding rates to the nearest cent.)
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