Workshop 2 Solutions.pdf - Workshop 2 1. Lanen et al.,...

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Workshop 21. Lanen et al., Review Q. 6-6 (6th& 5thed)The predetermined overhead rate is the value at which overhead is applied to oneunit of the cost allocation base. It is used in product costing to apply the overhead tothe units produced.2. Lanen et al., Review Q 6-7 (6th& 5thed)It would be ideal, but unlikely, that an allocation base would reflect direct causalitybetween the activity and the overhead cost.3. Lanen et al., Exercise 6-39 (6th& 5thed)Predetermined overhead rate = $35.00 per direct labor hour.BasicDominatorTotalUnits produced......................1,0002501,250Machine-hours......................4,5002,5007,000Direct labor-hours..................3,0002,0005,000Direct materials.....................$10,000$3,750$13,750Direct labor............................64,50035,500100,000Manufacturing overhead.......175,000Total Costs............................$288,750Burden Rate:.........................Total overhead..................$175,000÷ Direct labor-hours............÷ 5,000= $35.00
4. Lanen et al., Problem 6-55 (6thed), 6-49 (5thed)a.The overhead rates are $18 per machine hour and 45% of direct-materials cost.AccountMachine-HourRelatedMaterialsRelatedUtilities …………………………................$48,000Supplies.................................................$33,600Machine depreciation and maintenance.105,600Purchasing and storing materials...........38,400

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Term
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Cost Accounting, machine hours, Lanen, unit of the cost allocation base

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