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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem

Use the following information for Brief Exercises 4-31 and 4-32:

At the beginning of the year, Jonson Company estimated the following:

Chapter 4, Problem 32BEB, Use the following information for Brief Exercises 4-31 and 4-32: At the beginning of the year, , example  1

Refer to the information for Jonson Company above. Jonson uses departmental overhead rates. In the firing department, overhead is applied on the basis of kiln hours (number of hours spent in the gas-fired kiln). In the polishing department, overhead is applied on the basis of direct labor hours. Actual data for the month of July are as follows:

Chapter 4, Problem 32BEB, Use the following information for Brief Exercises 4-31 and 4-32: At the beginning of the year, , example  2

Brief Exercise 4-32 Convert Departmental Data to Plantwide Data, Plantwide Overhead Rate, Apply Overhead to Production

Refer to the information in Brief Exercise 4-31 for data. Now, assume that Jonson has decided to use a plantwide overhead rate based on direct labor hours.

Required:

  1. 1. Calculate the predetermined plantwide overhead rate. (Note: Round to the nearest cent.)
  2. 2. Calculate the overhead applied to production for the month of July.
  3. 3. Calculate the overhead variance for the month of July.

1.

To determine

Calculate the predetermined plantwide overhead rate.

Explanation

Predetermined Overhead Rate:

The amount which is calculated at the beginning of the accounting year for a related activity by dividing the total estimated annual overhead by estimated annual activity level is known as the predetermined overhead rate.

Use the following formula to calculate predetermined plantwide overhead rate:

Predetermined plantwideoverheadrate=EstimatedannualoverheadEstimateda</

2.

To determine

Calculate the overhead applied to production for the month of July.

3.

To determine

Calculate the overhead variance for the month of July.

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