ACG 2071 Managerial Accounting
Problem 3-
Under Company estimates the following overhead costs for 2003:
Equipment depreciation
$ 30,000
Equipment maintenance
64,000
Factory management salaries
150,000
Factory rent
50,000
Total manufacturing overhead
$294,000
Under Company incurred the following costs for 2003 for job 23:
Direct material
$80,000
Direct labor
60,000
Other jobs incurred $320,000 of direct labor. Under Company is also budgeting $350,000 in
direct labor costs and 20,000 machine hours for 2003. Actual manufacturing overhead for
2003 was $300,000.
A. Calculate the predetermined overhead rate using direct labor costs as the allocation
base.
$294,000/$350,000 = $0.84 per direct labor cost
B. Which of the allocation bases is preferred?
Why?
The allocation base which generates the smallest balance in the MOH expense account
prior to disposing the over or underapplied amount.
C. How much overhead will Under apply to job 23?
$0.84/DL$ * $60,000 = $50,400
D. What is the total cost of job 23?
DM + DL + MOH = $80,000 + $60,000 + $50,400 = $190.400
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Problem 5
Cakes R Us produced 5,000 cakes during April: The company uses normal costing. Costs
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- Spring '11
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- Accounting, Managerial Accounting, Depreciation, Expense, Salary
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