# Chapter 2 Questions.docx - PREDETERMINED OVERHEAD RATE...

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PREDETERMINED OVERHEAD RATE QUESTIONS 1. A company expected its annual overhead costs to be \$1,500,000 and direct labor costs to be \$1,000,000. Actual overhead was \$1,450,000, and actual labor costs totaled \$1,100,000. How much is the company’s predetermined overhead rate to the nearest cent? a. \$1.45 b. \$1.31 c. \$1.50 d. \$1.37
2. If annual overhead costs are expected to be \$750,000 and direct labor costs are expected to be \$1,000,000, then if the activity base is direct labor costs:
3. Simmons Inc. applies overhead to production at a predetermined rate of 90% based on direct labor cost. Job No. 250, the only job still in process at the end of August, has been charged with manufacturing overhead of \$8,100. What was the amount of direct materials charged to Job 250 assuming the balance in Work in Process inventory is \$30,000?
4. Spencer Inc. applies overhead to production at a predetermined rate of 80% based on direct labor cost. Job No. 130, the only job still in process at the end of August, has been charged with manufacturing overhead of \$6,400. What was the amount of direct materials charged to Job 130 assuming the balance in Work in Process inventory is \$20,000?