Answers for Chapters for "Intro to Managerial Accounting" 5th edition by Brewer

# Answers for Chapters for "Intro to Managerial Accounting" 5th edition by Brewer

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Chapter 2 Systems Design: Job-Order Costing Exercise 2-10  (15 minutes) 1. Predetermined overhead rates: Company X: Estimated total manufacturing overhead cost Predetermined  =  overhead rate Estimated total amount of the allocation base \$536,000  = \$6.70 per DLH 80,000 DLHs Company Y: Estimated total manufacturing overhead cost Predetermined  =  overhead rate Estimated total amount of the allocation base \$315,000  = \$4.50 per MH 70,000 MHs Company Z: Estimated total manufacturing overhead cost Predetermined  =  overhead rate Estimated total amount of the allocation base \$480,000 160% of direct  =  materials cost \$300,000 direct materials cost 2. Actual overhead costs incurred. ............................... \$530,000 Overhead cost applied to Work in Process: \$6.70 per hour × 78,000* actual hours. ..................   522,600     Underapplied overhead cost. .................................... \$ 7,400 *12,000 hours + 36,000 hours + 30,000 hours = 78,000 hours 2-1

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Exercise 2-11  (15 minutes) 1. Item (a): Actual manufacturing overhead costs for the year. Item (b): Overhead cost applied to work in process for the year. Item (c): Cost of goods manufactured for the year. Item (d): Cost of goods sold for the year. 2. Cost of Goods Sold. .......................................... 70,000 Manufacturing Overhead. ............................ 70,000 2-2
Exercise 2-12  (30 minutes) 1. The predetermined overhead rate is computed as follows: Estimated total manufacturing overhead cost Predetermined  =  overhead rate Estimated total amount of the allocation base \$192,000  = \$2.40 per MH 80,000 MHs 2. The amount of overhead cost applied to Work in Process for the year  would be: 75,000 machine-hours × \$2.40 per machine-hour = \$180,000.  This amount is shown in entry (a) below: Manufacturing Overhead (Maintenance) 21,000 (a) 180,000 (Indirect materials) 8,000 (Indirect labor) 60,000 (Utilities) 32,000 (Insurance) 7,000 (Depreciation) 56,000 Balance 4,000 Work in Process (Direct materials) 710,000 (Direct labor) 90,000 (Overhead) (a) 180,000 3. Overhead is underapplied by \$4,000 for the year, as shown in the  Manufacturing Overhead account above. The entry to close out this  balance to Cost of Goods Sold would be: Cost of Goods Sold. ..................................... 4,000 Manufacturing Overhead. ....................... 4,000 2-3

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## This note was uploaded on 02/02/2011 for the course ACCT 226 taught by Professor Smith during the Fall '10 term at South Carolina.

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Answers for Chapters for "Intro to Managerial Accounting" 5th edition by Brewer

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