Chapter 3, Problem 3.10E

 

To determine

 

Concept introduction:

Predetermined overhead allocation:

Predetermined overhead allocation is a method of allocation of overhead costs to the product units. Under this method the overhead costs are allocated to the product units using the allocation base. The allocation base is identified on the basis of type of production activities.

  $\text{Predetermined overhead allocation rate = }\frac{\text{Estimated Manufacturing overhead Cost}}{\text{Allocation base}}$

Requirement-1:

To calculate: The amount of overhead cost assigned to job W.

 

To determine

 

Concept introduction:

Predetermined overhead allocation:

Predetermined overhead allocation is a method of allocation of overhead costs to the product units. Under this method the overhead costs are allocated to the product units using the allocation base. The allocation base is identified on the basis of type of production activities.

  $\text{Predetermined overhead allocation rate = }\frac{\text{Estimated Manufacturing overhead Cost}}{\text{Allocation base}}$

Requirement-2:

To indicate: The way the cost of job W cost sheet shall be reported in the financial statement at the end of the year.