The predetermined overhead rate is calculated: a. at the end of the period b. changed regularly throughout the period O c. at the beginning of the period d. once actual overhead costs are calculated and compared with actual activity
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A: The above statement is False
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A: Overhead costs are indirect costs.
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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- When setting its predetermined overhead application rate. Tasty Turtle estimated its overhead would be $75,000 and manufacturing would require 25,000 machine hours in the next year. At the end of the year, it found that actual overhead was $74,000 and manufacturing required 24,000 machine hours. Determine the predetermined overhead rate. What is the overhead applied during the year? Prepare the journal entry to eliminate the under- or over applied overhead.The actual overhead for a company is $73,175. Overhead was based on 4,500 machine hours and was $3,325 over applied for the year. What is the overhead application rate per direct labor hour? What is the journal entry to dispose of the under applied overhead?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
- Blue Mountain Company applies overhead on the basis of machine hours. The following data was for the recent year: Estimated annual overhead cost $3000000 Actual annual overhead cost $2970000 Estimated machine hours 300000 Actual machine hours 295000 a) Calculate the appliedoverheadcostfor the year. b) Calculate the under-or overapplication of overhead for the year. c) Explain the reason for the difference in applied overhead costs and actual overhead costs, and how this difference is addressed at year-end.Assume (1) estimated fixed manufacturing overhead for the coming period of $207,000, (2) estimated variable manufacturing overhead of $2.00 per direct labor hour, (3) actual manufacturing overhead for the period of $320,000, (4) actual direct labor-hours worked of 54,000 hours, and (5) estimated direct labor-hours to be worked in the coming period of 55,000 hours. The amount of overhead applied to production during the period is closest to: (Round your intermediate value of "Predetermined overhead rate" to two decimal places.) Multiple Choice $317,000. $311,040. $325,926. $322,564.Hamilton Company applies manufacturing overhead costs to products based on direct labor hours. The company estimates manufacturing overhead cost for the year to be $252,000 and direct labor hours to be 20,000. Actual overhead and actual direct labor hours for the year were $265,000 and 22,200 hours, respectively. 1. Compute over- or underapplied overhead. 2a. Which accounts will be affected by the over- or underapplied manufacturing overhead? 2b. Will the accounts be increased or decreased to adjust for the over- or underapplied manufacturing overhead?
- Hamilton Company applies manufacturing overhead costs to products based on direct labor hours. The company estimates manufacturing overhead cost for the year to be $252,000 and direct labor hours to be 20,000. Actual overhead and actual direct labor hours for the year were $265,000 and 22,200 hours, respectively. Required: 1. Compute over- or underapplied overhead. 2a. Which accounts will be affected by the over- or underapplied manufacturing overhead? 2b. Will the accounts be increased or decreased to adjust for the over- or underapplied manufacturing overhead?Corporation bases its predetermined overhead rate on the estimated machinehours for the upcoming yearfor the upcoming year appear below Estimated machine - hours Estimated variable manufacturing overhead Estimated total fixed manufacturing overhead 36,000 3.01 per machine-hour 1,058,040 The predetermined overhead rate for the recently completed year was closest tod. Assume that the actual level of activity next year was 36,000 direct labor hours and that manufactur- ing overhead was $341,550. Determine the underapplied or overapplied manufacturing overhead at the end of the year. e. Describe two ways of handling any underapplied or overapplied manufacturing overhead at the end of the year. e. Describe two ways of handling any underapplied or overapplied manufacturing overhead at the end of the year.
- OH Application For the current year, Omaha Mechanical has a monthly overhead cost formula of $34,320 + $6 per direct labor hour. The firm’s current year expected annual capacity is 62,400 direct labor hours, to be incurred evenly each month. Making one unit of the company’s product requires 1.5 direct labor hours.a. Determine the total overhead to be applied per unit of product in the current year.Note: Round amount to two decimal places. Applied OH per unit Answer b. Prepare journal entries to record (1) the incurrence of $102,840 of actual overhead in January, when 5,112 direct labor hours were worked and (2) the application of overhead to Work in Process Inventory. Account Debit Credit 1 Answer Answer Answer Answer Answer Answer To record actual overhead 2 Answer Answer Answer Answer Answer Answer To record the appplication of overhead to WIP c. Given the actual direct labor hours in (b), how many units…Manufacturing overhead was estimated to be OMR 200,000 for the year along with 20,000 direct labor hours. Actual manufacturing overhead was OMR 215,000, and actual labor hours were 21,000. Which of the following would be correct? a. Overhead is overapplied by OMR 15,000. bOverhead is underapplied by OMR 5,000. of the given answer is correct d . Overhead is underapplied by OMR 15,000 . e. Overhead is overapplied by OMR 5,000 .Amanzi Company applies Overhead based on Direct Labour hours. At The beginning of the year, Amanzi estimates Overhead to be R700 000, Machine hours to be R200 000 and Direct labour hours to be R35000. During the year Amanzi has R5000 Direct labour hours and 10 000 Machine hoursWhat is the Predetermined Overhead rate?a. R15.00 per machine hourb. R14.00 per direct labour hourc. R20.00 per direct labor hourd. R18.00 per machine houre. None of these are correct.