Concept explainers
Concept introduction:
Predetermined overhead allocation:
Manufacturing overhead cost is the pool of all indirect costs incurred for production. These are the costs which are not directly traced to the product.
Requirement-1:
To calculate:
The Applied overhead cost.
Concept introduction:
Predetermined overhead allocation:
Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product. Manufacturing costs include indirect material indirect labor and overheads. These costs are allocated to the products using the predetermined overhead allocation rate. The formula of predetermined overhead allocation rate is as follows:
Requirement-2:
To indicate:
If the Applied overhead cost was on the basis of actual or estimated or both values
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EBK MANAGERIAL ACCOUNTING
- Which is the correct formula for computing the overhead rate? A. estimated use of the cost driver for production/estimated overhead for the activity B. estimated overhead for the product/estimated use of the cost driver for the activity C. estimated use of the cost driver for production/estimated overhead for the activity D. estimated overhead for the activity/estimated use of the cost driver for the activityarrow_forwardDescribe the Source 01 the data for increasing Work in Process for (a) direct materials, (b) direct labor, and (c) factory overheadarrow_forwardAssigning indirect costs to specific jobs is completed by which of the following? applying the costs to manufacturing overhead using the predetermined overhead rate using the manufacturing costs incurred applying the indirect labor to the work in process inventoryarrow_forward
- Which of the following is a prime cost? A. direct labor B. work in process inventory C. administrative labor D. factory maintenance expensesarrow_forwardDuring production, how are the costs in process costing accumulated? A. to cost of goods sold B. to each individual product C. to manufacturing overhead D. to each individual departmentarrow_forwardIn a job order cost system, overhead applied is debited to which account? A. work in process inventory B. finished goods inventory C. manufacturing overhead D. cost of goods soldarrow_forward
- Assigning indirect costs to departments is completed by __________________________. applying the predetermined overhead rate debiting the manufacturing costs incurred applying the costs to manufacturing overhead applying the costs to work in process inventoryarrow_forwardFreeman Furnishings has summarized its data as shown. Direct labor hours will be used as the activity base to allocate overhead: Compute the cost of goods manufactured.arrow_forwardFreeman Furnishings has summarized its data as shown: Compute the cost of goods manufactured, assuming that the overhead is allocated based on direct labor hoursarrow_forward
- Rex Industries has identified three different activities as cost drivers: machine setups, machine hours, and inspections. The overhead and estimated usage are: Compute the overhead rate for each activity.arrow_forwardWhy is the manufacturing overhead account debited as expenses are recognized and then credited when overhead is applied?arrow_forwardRocks Industries has identified three different activities as cost drivers: machine setups, machine hours, and inspections. The overhead and estimated usage are: Compute the overhead rate for each activity.arrow_forward
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