Managerial Accounting for Managers
4th Edition
ISBN: 9781259578540
Author: Eric Noreen, Peter C. Brewer Professor, Ray H Garrison
Publisher: McGraw-Hill Education
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Chapter 4, Problem 4.4E
To determine
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.
To calculate:The over or under applied overhead.
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Company XYZ uses direct labor hours to allocate its manufacturing overhead. Manufacturing overhead was estimated to be $410,000 for the year. Actual manufacturing overhead was $415,000 and actual labor hours were 22,000. The estimated direct labor hours for the year was 20,000. The amount of manufacturing overhead applied to production would be: Select one O
a. $372,727
b. $451,000
C $462,000 O a
d.5410,000 O
e None of the answers given
Q8 Read the following Case and write appropriate answer with calculation related to case
A product is manufactured as a result of two processes, A and B. details of process B for the month of august were as follow:
Particulars
Rs
Materials transferred from process A
10,000 kg valued at Rs.40,500
Labor Costs
1,000 hours valued Rs.5.616
Overheads
50% of labor cost
Output transferred to finished goods
8000 kg
Closing work in progress
900 kg
Normal loss is 10% of input and losses do not have scrap value. Closing work in progress is 100% complete for material, and 75% complete for both labor and overheads.
i)What is the value of the abnormal loss in Rs?
Nil
489
544
546 12.
ii) What is the value of the output (finished units) nearest to Rs?
Rs.43,977
Rs.39,139
Rs.43,488
Rs.43,680
iiI) What are the equivalent units of production as to material and labor & overheads in August?
Material…
P6-4A
High-Low and Cost Formula
Harrison Company has accumulated the following total manufacturing overhead costs for two levels of activity (within the relevant range):
Low
High
Activity (direct labor hours)
90,000
130,000
Total manufacturing overhead
$484,000
$628,000
The total overhead cost includes variable, fixed, and mixed costs. At 130,000 direct labor hours, the total cost breakdown is as follows:
Variable cost
$286,000
Fixed cost
85,000
Semi-mixed cost
$257,000
Required
a. Using the high-low method of cost analysis, determine the variable portion of the semi-variable cost per direct labor hour. Determine the total fixed cost…
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
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- LO.2 (Underapplied or overapplied overhead) At the end of 2013, Jackson Tank Company's accounts showed a S66,000 credit balance in Manufacturing Overhead Control. In addition, the company had the following account balances: Work in process inventory $384,000 Finished goods inventory 96,000 Cost of goods sold 720,000 a. Prepare the necessary journal entry to close the overhead account if the balance is considered immaterial.b. Prepare the necessary journal entry to close the overhead account if the balance is considered material.c. Which method do you believe is more appropriate for the company, and why?arrow_forward10. Ramona Diaz Ltd. produces two products, P1 and P2, at its two departments: Machining and Assembly, as shown in the table below. The accountant tries to allocate overhead costs to the two products. If the accountant decides to allocate overhead based on labor hours, what is P1’s share of the total overhead costs? $180,000 $200,000 $220,000 $240,000arrow_forwardHello, Hello, Sorry I submitted this question earlier but one of my figures was incorrect. My error. Buck and Company incurred the following costs during August: Raw materials purchased $41,440 Direct labor ($13.6 per hour) 60,384 Manufacturing overhead (actual) 90,420 Selling expenses 31,890 Administrative expenses 14,070 Interest expense 6,112 Manufacturing overhead is applied on the basis of $20 per direct labor hour. Assume that overapplied or underapplied overhead is transferred to the cost of goods sold only at the end of the year. During the month, 4120 units of product were manufactured and 4,400 units of product were sold. On August 1 and August 31, Buck and Company carried the following inventory balances. August 1 August 31 Raw materials $19,000 $17,800 Work in progress 53,000 56,000 Finished goods 40,100 27,267 Question a-1: Prepare a statement of costs of goods manufactured for…arrow_forward
- XYZ industries applies overhead based on direct labor cost. The follawing information was available for the last year: Actual manufacturing overhead OMR50,000; Underapplied manufacturing overhead OMR10,400; Actual Prime cost OMR52,000; Actual Direct material cost OMR19,000; Estimated direct labor cost OMR29,000. What was the estimated manufacturing overhead for the year? Select one: a None of the answers given b. OMR39,600 C OMR34,800 d OMRI9,600 e OMR37.200arrow_forward3. A company estimated 100,000 direct labor hours and $800,000 in overhead. The actual overhead was $805,100, and there were 99,900 direct labor hours. PLEASE NOTE: For the first question, the predetermined overhead rate will be rounded to two decimal places and shown with "$" and commas as needed (i.e. $12,345.67). The rates will include their proper label according to the textbook examples (no abbreviations). For the second question, the dollar amount is rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). For the third question, please use "overapplied" or "underapplied" (no quotes) for the first part and the dollar amount is rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345) for the second part. What is the predetermined overhead rate? How much was applied during the year? Overhead was ? by ?arrow_forward4. A company used $35,000 of direct materials, incurred $73,000 in direct labor cost, and had $114,000 in factory overhead costs during the period. If beginning and ending work in process inventories were $28,000 and $32,000, respectively, the cost of goods manufactured was Group of answer choicesarrow_forward
- The Ruqaiyah Company estimated Department A's overhead at P255,000 for the period based on an estimated volume of 100,000 direct labor hours. At the end of the period, the factory overhead control account for Department A had a balance of P265,500; actual direct labor hours were 105,000. What was the over- or under-applied overhead for the period? * A. P2,250 B. P(2,250) C. P15,000 D. P(15,000)arrow_forward4. UFC Inc. applies factory overhead as follows: Department Per Machine HourFabricating P10Spreading P20Packaging P30Actual machine hours are:Fabricating – 2,000 hoursSpreading – 1,500 hoursPackaging – 3,000 hoursThe following additional data are provided:a. The actual factory overhead expense for the period is P100,000b. The ending balances of the inventories and cost of goods sold after the application of overhead are asfollows: Raw materials 200,000Work in process 100,000Finished goods 400,000Cost of goods sold 500,000 c. The over/(under) applied overhead during the period is considered material if at least 30% of actualfactory overhead, What is the adjusted cost of goods sold after closing the under/over application of factory overhead?A. 460,000B. 480,000C. 540,000D. 483,333arrow_forwardNova Company’s total overhead cost at various levels of activity are presented below:TotalMachine- OverheadMonth Hours CostApril ............................ 70,000 $198,000May ............................ 60,000 $174,000June ........................... 80,000 $222,000July ............................. 90,000 $246,000Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. Thebreakdown of these costs at the 60,000 machine-hour level of activity is:Utilities (variable) ................................... $ 48,000Supervisory salaries (fixed) ................... 21,000Maintenance (mixed) ............................. 105,000Total overhead cost ............................... $174,000Nova Company’s management wants to break down the maintenance cost into its variable and fixedcost elements.Required:1. Estimate how much of the $246,000 of overhead cost in July was maintenance cost. (Hint: to do this,it may be helpful to first determine how much…arrow_forward
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