Managerial Accounting for Managers
4th Edition
ISBN: 9781259578540
Author: Eric Noreen, Peter C. Brewer Professor, Ray H Garrison
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 4, Problem 4.1E
Compute the Predetermined
Logan Products computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 40,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $466,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $3.00 per direct labor-hour. Logan’s actual manufacturing overhead for the year was $713,400 and its actual total direct labor was 41,000 hours.
Required:
Compute the company' s predetermined overhead rate for the year.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Using the highest and lowest levels of activity for the past year, the cost function representing maintenance costs (y) as a function of machine hours (x) was developed: y=439,000 + 14x. The lowest level of machine hours last year was 4000. The maintenance cost incurred at the highest and lowest level of machine hours were P551,000 and P495,000, respectively. If 5975 machine hours were used the following month, what amount maintenance cost can the company expect?
a. 439,000b. 495,000c. 551,000d. 522,650
1
A company had the following costs in May when 400 units were produced: materials, $4,200; hourly labor, $1,600; depreciation, $800; rent, $700; and other fixed costs, $500. If the production level changes to 500 units, how much will the total costs be? Enter your answers as amounts only with neither commas nor decimals.
1. Golf Corporation estimates that its production for the coming year will be 25,000 units, which is 90% of normal capacity, with the following units costs: Materials P50 Direct labor 90 Direct labor is paid at the rate of P25 per hour. The machine should be run 20 minutes to produce one unit. Total estimated overhead is expected to consist of P900,000 for variable overhead and P900,000 for fixed overhead.
d. What is the predetermined overhead rate base on direct labor hours? e. What is the predetermined overhead rate based on machine hours? f. What is the predetermined overhead rate base on units of production using the normal capacity level?
Chapter 4 Solutions
Managerial Accounting for Managers
Ch. 4 - Why arent actual manufacturing overhead costs...Ch. 4 - What is the purpose of the job cost sheet in a...Ch. 4 - Prob. 4.3QCh. 4 - Prob. 4.4QCh. 4 - Prob. 4.5QCh. 4 - Prob. 4.6QCh. 4 - Prob. 4.7QCh. 4 - Prob. 4.8QCh. 4 - Prob. 4.9QCh. 4 - Prob. 4.10Q
Ch. 4 - Prob. 4.11QCh. 4 - Prob. 4.12QCh. 4 - Prob. 4.13QCh. 4 - Prob. 4.14QCh. 4 - Compute the Predetermined Overhead Rate [LO4-1]...Ch. 4 - Prob. 4.2ECh. 4 - Prob. 4.3ECh. 4 - Prob. 4.4ECh. 4 - Direct Method of Determining cost of Goods sold...Ch. 4 - Prob. 4.6ECh. 4 - Prob. 4.7ECh. 4 - Computing predetermined overhead Rates and 00b...Ch. 4 - Departmental Overhead Rates [LO4-1, LO4-2, LO4-3]...Ch. 4 - Prob. 4.10ECh. 4 - Prob. 4.11ECh. 4 - Applying overhead; cost of Goods Manufactured...Ch. 4 - Prob. 4.13ECh. 4 - Prob. 4.14E
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Event 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_forwardPocono Cement Forms expects $900,000 in overhead during the next year. It does not know whether it should apply overhead on the basis of its anticipated direct labor hours of 60,000 or its expected machine hours of 30,000. Determine the product cost under each predetermined allocation rate if the last job incurred $1,550 in direct material cost, 90 direct labor hours, and 75 machine hours. Wages are paid at $16 per hour.arrow_forwardCompany 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 estimated variable overhead is $10 per hour and the estimated fixed overhead costs are $152,000. Calculate the predetermined overhead rate. Select one O a. $10.80 b. None of the answers given c S0.00 O d. $11.80 e s0.09arrow_forward
- H6. Broduer Aquatics manufactures swimming pool equipment. Broduer estimates total manufacturing overhead costs next year to be $2,500,000 The company also estimates it will use 50,000 direct labour hours and incur $1,000,000 of direct labour cost next year. In addition, the machines are expected to be run for 30,000 hours. Compute the predetermined manufacturing overhead rate for next year under the following independent situations: 1. Assume that Brodeur uses direct labour hours as its manufacturing overhead allocation base. 2. Assume that Brodeur suses direct labour cost as its manufacturing overhead allocation base. 3. Assume that Brodeur uses machine hours as its manufacturing allocation basearrow_forward7. For The period just ended, the gross margin of Robin Company was P 3,840,000, the cost of goods manufactured was P 13,6000,000; the work in process inventory increased by P400,000 and finished goods ending inventories increased by P400,000 during the year, but the materials inventories decreased by P 120,000. Assuming that factory overhead is applied to production at 150% of direct labor cost but only 45% of material cost, how much is the total factory overhead applied to production?arrow_forwardHrs.7 PT corp makes 300 units of A per year. At this level, the cost per unit includes $360 in direct materials, $1,000 in direct labor, $240 in variable overhead, and $900 in fixed overhead. An outside supplier has offered to make all 300 units for $2,100 per unit. If PT accepts this offer, two thirds of the fixed overhead would persist, but would be defrayed by renting out the floor space for $72,000 per year. What is the total fixed costs from the original estimate of production costs per unit? How much of the total fixed costs will persist (including defrayal by renting the space)?arrow_forward
- Assume that actual overhead is $613,000 in a given year, the overhead rate is $10 per unit, 60,000units were sold, and 59,000 units were produced. For the end of the year, is overhead underapplied oroverapplied? By how much?arrow_forward1. Golf Corporation estimates that its production for the coming year will be 25,000 units, which is 90% of normal capacity, with the following units costs: Materials P50 Direct labor 90 Direct labor is paid at the rate of P25 per hour. The machine should be run 20 minutes to produce one unit. Total estimated overhead is expected to consist of P900,000 for variable overhead and P900,000 for fixed overhead. g. What is the predetermined overhead rate base on material cost using the normal capacity level? h. What is the overhead rate base on machine hours using the normal capacity activity level?arrow_forwardPale Manufacturing Company has an expected production level of 175,000 product units in 2020. Fixed factory overhead is P450,000 and the company applies factory overhead on the basis of expected production level at the rate of P5.20 per unit. The variable overhead cost per unit is * Ph 2.57 Ph 2.63 Ph 2.93 Ph 3.02arrow_forward
- A company expected its annual overhead costs to be $2700000 and direct labor costs to be $1500000. Actual overhead was $2650000, and actual labor costs totaled $1600000. How much is the company’s predetermined overhead rate to the nearest cent? $1.69 $1.80 $1.66 $1.77arrow_forwardAaron, Inc. estimates direct labor costs and manufacturing overhead costs for the coming year to be $770,000 and $500,000, respectively. Aaron allocates overhead costs based on machine hours. The estimated total labor hours and machine hours for the coming year are 17,000 hours and 5,000 hours, respectively. What is the predetermined overhead allocation rate? (Round your answer to the nearest cent.) A. $29.41 per labor hour B. $1.54 per labor hour C. $154.00 per machine hour D. $100.00 per machine hourarrow_forwardpls show solutions Last year, Harris Company manufactured 17,000 units and sold 13,000 units. Production costs for the year were asfollows: Direct materials P153,000Direct labor P110,500Variable manufacturing overhead P204,000Fixed manufacturing overhead 255,000 Sales were P780,000 for the year, variable selling and administrative expenses were P88,400, and fixed selling and administrative expenses were P170,000. There was no beginning inventory. Assume that direct labor is a variable cost. Under absorption costing, the carrying value on the balance sheet of the ending inventory for the year wouldbe?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Cost Accounting - Definition, Purpose, Types, How it Works?; Author: WallStreetMojo;https://www.youtube.com/watch?v=AwrwUf8vYEY;License: Standard YouTube License, CC-BY