(TCO 2) Bubba’s Crawfish Processing Company uses a traditional
overhead allocation based on direct labor hours. For the current year
overhead is estimated at $2,250,000 and direct labor hours are budgeted
at 415,000 hours. Actual overhead was $2,200,000 and actual direct
labor hours worked were 422,000.
(a) Calculate the predetermined overhead rate.
(b) Calculate the overhead applied.
(c) Determine the amount of overhead that is over/underapplied.
a.) the predetermined overhead rate
would be: $2,250,000/$415,000= $5.42
b.) the overhead applied would be:
$5.42*$422,000=$2,287,240 c.) This
would show me that the estimated
amounts were underapplied.
(a) $2,250,000 / 415,000 hours = $5.42 per direct labor hour (DLH)
(b) $5.42 DLH * 422,000 hours = $2,287,240
(c) Overapplied $87,240 ($2,287,240 - $2,200,000)
(TCO 2) Thibodeaux Limousine Corporation is trying to determine a
predetermined manufacturing overhead. Estimated overhead for the
upcoming year is $776,000. Budgeted machine hours are 105,000
hours, and budgeted labor hours are 17,500 hours at a rate of $10.00
per hour. Compute the predetermined overhead rate based on:
(a) Direct labor dollars
(b) Direct labor hours
(c) Machine hours
a.) the predetermined overhead rate for
Direct Labor Dollars would be: $4.43 by
first multiplying the budgeted labor hours
by the rate then dividing the budgeted
overhead by that budgeted labor hours in
dollars. b.)the predetermined overhead
rate based on the Direct Labor Hours
would be: 776,000/17,500=44.34 c.) the
predetermined overhead rate based on
the Machine hours would be:
(a) $776,000 / (17,500 * $10.00) = 443%
(b) $776,000 / 17,500 = $44.34 DLH
(c) $776,000 / 105,000 = $7.39 per machine hour
(TCO 1) List and briefly describe four of the five differences between
managerial accounting and financial accounting.
The main differences between managerial
accounting and financial accounting are:
Managerial account is allowed to not use
the GAAP whereas, financial account has
to use the GAAP. Managerial account
usually has more details included, it also
usually bases a lot on the future using
estimates and predetermined amounts.
And lastly but most important I would say
managerial account is more for the office
and financial accounting is for investors.