App03A - Appendix 3A, The Predetermined Overhead Rate and...

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Unformatted text preview: Appendix 3A, The Predetermined Overhead Rate and Capacity Question Type Difficulty LO1: Job order vs process costing LO2: Job-ordering costing documents LO3: Predetermined overhead rate LO4: Flow of costs and journal entries LO5: Applying overhead LO6: Schedule of cost of goods manufactured LO7: T-accounts LO8: Under- or overapplied overhead LO9: Overhead rate and capacity (App 3A) Professional Exam Adapted ID Origin CMA/CPA origin 1 T/F M x New, 11/27/2005, B E.N. 2 M/C M x 6/27/2007 App3A Single A1 E.N. 3 M/C M x 6/27/2007 App3A Single B1 E.N. 3A- 1 4-9 Multipart M/C M x 6/27/2007 App3A MC A1 E.N. 3A- 2 10-13 Multipart M/C M x 6/27/2007 App3A MC B1 E.N. 3A- 3 14-15 Multipart M/C M x 6/27/2007 App3A MC C1 E.N. 3A- 4 16-18 Multipart M/C M x 6/27/2007 App3A MC D1 E.N. 3A- 5 19-20 Multipart M/C M x 6/27/2007 App3A MC E1 E.N. 21 Problem M x 6/27/2007 App3A Problem A1 E.N. 22 Problem M x 6/27/2007 App3A Problem B1 E.N. 23 Problem M x 6/27/2007 App3A Problem C1 E.N. 24 Problem M x 6/27/2007 App3A Problem E.N. 3A-1 Appendix 3A, The Predetermined Overhead Rate and Capacity D1 25 Problem M x 6/27/2007 App3A Problem E1 E.N. 26 Problem M x 6/27/2007 App3A Problem F1 E.N. 3A-2 Appendix 3A, The Predetermined Overhead Rate and Capacity True / False Questions 1. If the predetermined overhead rate is based on the estimated total amount of the allocation base at capacity, it is more likely that overhead will be overapplied than underapplied. True False Multiple Choice Questions 2. The management of Baggerly Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 81,000 machine-hours. In addition, capacity is 95,000 machine-hours and the actual level of activity for the year is 84,900 machine-hours. All of the manufacturing overhead is fixed and is $6,617,700 per year. For simplicity, it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity. It is further assumed that this is also the actual amount of manufacturing overhead for the year. If the company bases its predetermined overhead rate on capacity, by how much was manufacturing overhead underapplied or overapplied? A. $318,630 Overapplied B. $703,566 Underapplied C. $703,566 Overapplied D. $318,630 Underapplied 3A-3 Appendix 3A, The Predetermined Overhead Rate and Capacity 3. The management of Mcneff Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours....
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App03A - Appendix 3A, The Predetermined Overhead Rate and...

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