2071extracostflowsol

2071extracostflowsol - ACG 2071 Managerial Accounting...

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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
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2071extracostflowsol - ACG 2071 Managerial Accounting...

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