The following information pertains to Sandy Sand Company for 2021. Budgeted direct-labour cost: -------------------------------- 90,000 hours at $24 per hour Actual direct-labour cost: ------------------------------------ 95,000 hours at $25.50 per hour. Budgeted Manufacturing Overhead: --------------------- $ 985,500 Actual Manufacturing Overhead: Depreciation ------------------------------------------------- $ 240,000 Property Taxes--------------------------------------------------- 12,000
The following information pertains to Sandy Sand Company for 2021.
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Budgeted direct-labour cost: -------------------------------- |
90,000 hours at $24 per hour |
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Actual direct-labour cost: ------------------------------------ |
95,000 hours at $25.50 per hour. |
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Budgeted Manufacturing Overhead: --------------------- |
$ 985,500 |
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Actual Manufacturing Overhead: |
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$ 240,000 |
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Property Taxes--------------------------------------------------- |
12,000 |
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Indirect Labour -------------------------------------------------- |
82,000 |
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Supervisory Salaries -------------------------------------------- |
200,000 |
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Utilities------------------------------------------------------------ |
59,000 |
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Insurance ---------------------------------------------------------- |
30,000 |
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Rental of Space-------------------------------------------------- |
300,000 |
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Indirect Material ------------------------------------------------- |
79,000 |
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Required
- Compute the firm’s predetermined overhead rate, which is based on direct-labour hours.
- Calculate the over-applied or under-applied overhead for 2021.
- Prepare a
journal entry to close out the Manufacturing Overhead Account into Cost of Goods Sold.
- Activity based costing (ABC) is an alternative method of allocating overheads. How is ABC useful to managers?
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