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Ripley, Inc., costs products using a normal costing system. The following data are available for last year: Overhead is applied on the basis of direct labor hours. Required: 1. What was the predetermined overhead rate? 2. What was the applied overhead for last year? 3. Was overhead over- or underapplied, and by how much? 4. What was the total cost per unit produced (carry your answer to four significant digits)?

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Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

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Chapter
Section
BuyFindarrow_forward

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
Chapter 4, Problem 11E
Textbook Problem
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Ripley, Inc., costs products using a normal costing system. The following data are available for last year:

Chapter 4, Problem 11E, Ripley, Inc., costs products using a normal costing system. The following data are available for

Overhead is applied on the basis of direct labor hours.

Required:

  1. 1. What was the predetermined overhead rate?
  2. 2. What was the applied overhead for last year?
  3. 3. Was overhead over- or underapplied, and by how much?
  4. 4. What was the total cost per unit produced (carry your answer to four significant digits)?

1.

To determine

Identify the predetermined overhead rate for Incorporation R.

Explanation of Solution

Predetermined overhead rate: Predetermined overhead rate is a measure used to allocate the budgeted manufacturing overhead cost to the products or job orders throughout a particular period. This is generally assessed at the commencement of each reporting period.

Calculate predetermined overhead for Incorporation R for last year:

Predetermined overhead rate = Budgeted overhead rateBudgeted direct labor hours</

2.

To determine

Compute applied overhead for last year for Incorporation R.

3.

To determine

Identify whether overhead is overapplied or underapplied and determine the amount by which it is overapplied or underapplied for Incorporation L.

4.

To determine

Ascertain the total cost per unit produced for Incorporation R.

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Chapter 4 Solutions

Cornerstones of Cost Management (Cornerstones Series)
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