Tutorial 2 sol ACFI 2003 5th ed.docx - Tutorial 2 1. Lanen...

Tutorial 2
1. Lanen et al., (2017): Review Q. 6-6, p. 227.
The predetermined overhead rate is the value at which overhead is applied to one
unit of the cost allocation base. It is used in product costing to apply the overhead to
the units 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 causality
between the activity and the overhead cost.
3. Lanen et al., (2017): Exercises 6-39, p. 232
Predetermined overhead rate = $35.00 per direct labor hour.
Basic Dominator Total
Units produced ....................... 1,000 250 1,250
Machine-hours ....................... 4,500 2,500 7,000
Direct labor-hours .................. 3,000 2,000 5,000
Direct materials ...................... $10,000 $3,750 $13,750
Direct labor ............................ 64,500 35,500 100,000
Manufacturing overhead ........ 175,000
Total Costs ............................. $288,750
Burden Rate: ..........................
Total overhead ................... $175,000
÷ Direct labor-hours ............ ÷ 5,000 = $35.00

4. Lanen et al., (2017): Problem 6-49, p. 234.
a. The overhead rates are $18 per machine hour and 45% of direct-materials cost.
Account
Machine-Hour
Related
Materials
Related
Utilities ………………………… ................... $ 48,000
Supplies ..................................................... $33,600
Machine depreciation and maintenance .... 105,600
Purchasing and storing materials .............. 38,400