ACFI2003 WEEK2.docx - Tutorial 2 1. Lanen et al., (2017):...

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Tutorial21. Lanen et al., (2017): Review Q. 6-6, p. 227.Predetermined overhead rates cost per unit of the allocation base used to chargeoverhead to products.The predetermined overhead rate is the value at which overhead is applied to one unitof the cost allocation base.It is used in product costing to apply the overhead to theunits produced.2. Lanen et al., (2017): Review Q 6-7, p. 227.It would be ideal, but unlikely, that an allocation base would reflect direct causalitybetween the activity and the overhead cost.3. Lanen et al., (2017): Exercises 6-39, p. 232.Predetermined Overhead rate=$175,000/5,000=$35/hoursPredetermined overhead rate= Overhead cost/Volume of cost driver4. Lanen et al., (2017): Problem 6-49, p. 234.a.Machine-hoursMaterialsUtilities$48,000Supplies$33,600Machine depreciation and maintenance$105,600Purchasing and storing materials$38,400Miscellaneous$40,800Total$194,400$72,000Machine-hours predetermined overhead rate=$194,400/10,800=$18/hoursMaterials predetermined overhead rate=$72,000/160,000=0.45=45%b.Total costs of production:JerseysShortsTotalMachine-hours used6,0004,80010,800

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Supply And Demand, Lanen, overhead rates cost

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