HW2 - Healy Shen Section 302 6 February 2015 Q3-1 Q3-5 Q3-8...

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Healy Shen Section 302 6 February 2015 Q3-1, Q3-5, Q3-8, E3-12, E3-14, E3-17, E3-18 Q3-1. Actual manufacturing overhead costs such as factory rent and utility bills are not applied directly to each job or are used in small quantities for each job that tracing it to each job is impractical. Q3-5. If an actual rate is computed monthly or quarterly, seasonal factors in overhead costs or in the allocation base can produce fluctuations in the overhead rate. That is why most companies use a predetermined rate computed at the beginning of each year. Q3-8. The Manufacturing Overhead clearing account is credited when overhead cost is applied. The actual amount is never exactly the same as the applied amount. This is because the predetermined rate that we set at the beginning of the year is based on an estimate of the cost and units of the allocation base, which are predictions impossible to align with actual cost. E3-12. 1. Applied manufacturing overhead costs amount to $485,000. Actual MOH costs are $473,000. Therefore the company has overapplied MOH costs by $12,000.

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