View the step-by-step solution to:

Diamond Company and Client Company assign manufacturing overhead to Work in Process Inventory using direct labor cost. The following information is...

Diamond Company and Client Company assign manufacturing overhead to Work in Process Inventory using direct labor cost. The following information is available for the companies for the year:

 

  Diamond Company   Client Company

Actual direct labor cost $ 200,000     $ 112,500  

Estimated direct labor cost  $187,500       $ 125,000  

Actual manufacturing overhead cost  $ 72,500       $ 95,000  

Estimated manufacturing overhead cost  $75,000     $100,000  

 

Required

  1. Compute the predetermined overhead rate for each company.
  2. Determine the amount of overhead cost that would be applied to Work in Process Inventory for each company.
  3. Compute the amount of overapplied or underapplied manufacturing overhead cost for each company.

Top Answer

Answer Diamond Company Predetermined overhead rate  = 40% of Direct labor cost Amount of overhead cost... View the full answer

Sign up to view the full answer

Other Answers

Compute the predetermined overhead rate for each company. Diamond company's predetermined rate = 75,000 / 187,500 = 0.40 or... View the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask a homework question - tutors are online