CONNECT ONLINE ACCESS F/MANAGERIAL ACC.
6th Edition
ISBN: 9781264445356
Author: Noreen
Publisher: MCG
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Chapter 10A, Problem 10A.6E
1.
To determine
Introduction: Overhead means the ongoing business expenses which are not directly incurred while producing product or service. Overhead is important while preparing budget but it is also used to determine the amount company must charge in order to incur profit mapping the formal plan.
To compute: Predetermined overhead rate and break it down into variable and fixed elements.
2.
To determine
Introduction: Overhead means the ongoing business expenses which are not directly incurred while producing product or service. Overhead is important while preparing budget but it is also used to determine the amount company must charge in order to incur profit mapping the formal plan.
To compute: The
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Predetermined Overhead Rate
Lasser Company plans to produce 10,000 units next period at a denominator activity of 30,000 direct labor-hours. The direct labor wage rate is $12 per hour. The company’s standards allow 2.5 yards of direct materials for each unit of product; the standard material cost is $8.60 per yard. ‘I he company’s budget includes variable manufacturing overhead cost of $1.90 per direct labor-hour and fixed manufacturing overhead of $168,000 per period.
Required:
1. Using 30,000 direct labor-hours as the denominator activity, compute the predetermined overhead rate and break it down into variable and fixed elements.
2. Complete the standard cost card below for one unit of product:
Apex Corporation estimates that its production for the coming year will be 10,000 units with the following unit costs:
Direct materials P40
Direct labor P60
Direct labor is paid at the rate of P24 per hour. The machine should be run for 20 minutes to produce one unit. Total estimated
overhead is expected to consist of P400,000 for variable overhead and P400,000 for fixed overhead.
What is the predetermined overhead rate based on direct labor cost?
B
D
113%
166%
133%
153%
Company XYZ uses machine hours to allocate its manufacturing overhead. The company
estimates that total machine hours to be operated next year are 190,000 hours. The estimat
variable overhead is $9 per hour and the estimated fixed overhead costs are $152.000.
Calculate the predetermined overhead rate.
Select one:
Oa. $10.80
Ob. $9.80
Chapter 10A Solutions
CONNECT ONLINE ACCESS F/MANAGERIAL ACC.
Ch. 10A - Fixed Overhead Variances LO10—4 Primara...Ch. 10A - Prob. 10A.2ECh. 10A - Prob. 10A.3ECh. 10A - Prob. 10A.4ECh. 10A - Prob. 10A.5ECh. 10A - Prob. 10A.6ECh. 10A - Prob. 10A.7ECh. 10A - Applying Overhead; Overhead Variances LO10—3,...Ch. 10A - Prob. 10A.9PCh. 10A - Comprehensive Standard Cost Variances LO10—1,...
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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: 100,000arrow_forwardPatterson Corporation expects to incur 70,000 of factory overhead and 60,000 of general and administrative costs next year. Direct labor costs at 5 per hour are expected to total 50,000. If factory overhead is to be applied per direct labor hour, how much overhead will be applied to a job incurring 20 hours of direct labor? a. 120 b. 260 c. 28 d. 140arrow_forwardGent Designs requires three units of part A for every unit of Al that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4.000 units were produced: Variable manufacturing overhead is applied at $1.00 per unit. The other $0.30 of overhead consists of allocated fixed costs. Gent will need 6,000 units of part A for the next years production. Cory Corporation has offered to supply 6,000 units of part A at a price of $7.00 per unit. It Gent accepts the offer, all of the variable costs and $1,200 of the fixed costs will be avoided. Should Gent Designs accept the offer from Cory Corporation?arrow_forward
- Remarkable Enterprises requires four units of part A for every unit of Al that it produces. Currently, part A is made by Remarkable, with these per-unit costs in a month when 4,000 units were produced: Variable manufacturing overhead is applied at $1.60 per unit. The other $0.50 of overhead consists of allocated fixed costs. Remarkable will need 8,000 units of part A for the next years production. Altoona Corporation has offered to supply 8,000 units of part A at a price of $8.00 per unit. If Remarkable accepts the offer, all of the variable costs and $2,000 of the fixed costs will be avoided. Should Remarkable accept the offer from Altoona Corporation?arrow_forwardCrystal Pools estimates overhead will utilize 250,000 machine hours and cost $750,000. It takes 2 machine hours per unit, direct material cost of $14 per unit, and direct labor of $20 per unit. What is the cost of each unit produced?arrow_forwardEvent Forms expects $120,000 in overhead during the next year. It doesn't know whether it should apply overhead on the basis of its anticipated direct labor hours of 6,000 or its expected machine hours of 5,000. What would be the product cost under each predetermined allocation rate if the last job incurred $3,500 in direct material cost, 55 direct labor hours, and 55 machine hours? Wages are paid at $17 per hour.arrow_forward
- Cozy, Inc., manufactures small and large blankets. It estimates $350,000 in overhead during the manufacturing of 75,000 small blankets and 25,000 large blankets. What is the predetermined overhead rate if a small blanket takes 1 machine hour and a large blanket takes 2 machine hours?arrow_forwardA company estimates its manufacturing overhead will be $840,000 for the next year. What is the predetermined overhead rate given each of the following Independent allocation bases? Budgeted direct labor hours: 90,615 Budgeted direct labor expense: $750000 Estimated machine hours: 150,000arrow_forwardBoarders estimates overhead will utilize 160,000 machine hours and cost $80,000. It takes 4 machine hours per unit, direct material cost of $5 per unit, and direct labor of $5 per unit. What is the cost of each unit produced?arrow_forward
- 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 hoursarrow_forwardPlata Company has identified the following overhead activities, costs, and activity drivers for the coming year: Plata produces two models of microwave ovens with the following activity demands: The companys normal activity is 21,000 machine hours. Calculate the total overhead cost that would be assigned to Model X using an activity-based costing system: a. 230,000 b. 240,000 c. 280,000 d. 190,000arrow_forwardThe expected costs for the Maintenance Department of Stazler, Inc., for the coming year include: Fixed costs (salaries, tools): 64,900 per year Variable costs (supplies): 1.35 per maintenance hour Estimated usage by: Actual usage by: Required: 1. Calculate a single charging rate for the Maintenance Department. 2. Use this rate to assign the costs of the Maintenance Department to the user departments based on actual usage. Calculate the total amount charged for maintenance for the year. 3. What if the Assembly Department used 4,000 maintenance hours in the year? How much would have been charged out to the three departments?arrow_forward
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