ACC 312 Study Guide - Midterm Guide: Deutsche Luft Hansa

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greenwalrus59

13 Nov 2017

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Actual overhead costs are not assigned to jobs: a predetermined overhead rate is used to assign overhead cost to products and services. It is: based on estimated data, established before the period begins, why use estimated data, waiting until the year is over to determine actual overhead costs would be too late. Managers want cost data immediately: overhead rates, if based on actual costs and activity, would vary substantially from month to month. Much of this variation would be due to random changes in activity. The formula for computing a predetermined overhead rate is: The company in the preceding example applies overhead costs to jobs on the basis of direct labor-hours. In other words, the allocation base is direct labor-hours. At the beginning of the year the company estimated that it would incur ,000 in (cid:373)a(cid:374)ufa(cid:272)turi(cid:374)g o(cid:448)erhead (cid:272)osts a(cid:374)d (cid:449)ould (cid:449)ork 40,000 dire(cid:272)t la(cid:271)or hours. The process of assigning overhead to jobs is known as applying overhead.

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Sweeten Company had no jobs in progress at the beggining ofMarch and no beginning inventories. It started only wo jobs duringMarch - Job P and Job Q. Job P was completed and sold by the end ofthe March and Job Q was incomplete at the end of the March. Thecompany uses a plantwide predetermined overhead rate based ondirect labor hours. The following additional Information isavailible for the company as a whole and as for Jobs P and Q (alldata and questions relate to the month of march)

Estimated total fixed manufacturing overhead $10,000

Estimated variable manufacturing overhead per direct labor hour$1.00

Estimated total direct labor hours to be worked 2,000

Total actual manufacturing overhead costs incurred $12,500

Direct Materials -

Job P - $13,000. Job Q- $8,000

Direct Labor Cost-

Job P- $21,000. Job Q- $7,500

Actual direct labor hours worked

Job P- 1,400. Job Q- 500

1- If job P includes 20 units, what is its unit productcost?

Unit product cost $______________________________

2- What is the total amount of manufacturing cost assigned toJob Qas of the end of March (including applied overhead)?

Total maufacturing cost $_________________________________

maroonmouse70

EXERCISE 3-14 Computing Predetermined Overhead Rates and Job Costs [LO3-1, L03-2, L03-3, LO3-7] Moody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production ...... Fixed manufacturing overhead cost .... Variable manufacturing overhead cost per machine-hour ....... 100,000 $650,000 $3.00 Required: 1. Compute the predetermined overhead rate. 2. During the year, Job 400 was started and completed. The following information was available with respect to this job: $450 Direct materials requisitioned ..... Direct labor cost ... Machine-hours used ...... $210 40 Compute the total manufacturing cost assigned to Job 400. During the year, the company worked a total of 146,000 machine-hours on all jobs and incurred actual manufacturing overhead costs of $1,350,000. What is the amount of underap- plied or overapplied overhead for the year? If this amount were closed out entirely to Cost of Goods Sold would the journal entry increase or decrease net operating income?

Verizox Company uses a job order cost system with manufacturingoverhead applied to products based on direct labor hours. At thebeginning of the most recent year, the company estimated itsmanufacturing overhead cost at $168,350. Estimated direct laborcost was $458,800 for 18,500 hours.

Actual costs for the most recent month aresummarized here:

ItemDescription	Total Cost
Direct labor (1,850hours)	$	45,881
Indirect costs
Indirect labor		2,530
Indirect materials		3,390
Factory rent		3,360
Factory supervision		4,860
Factory depreciation		5,630
Factory janitorial work		1,280
Factory insurance		1,790
General and administrativesalaries		4,180
Selling expenses		5,380

Required:
1.	Calculate the predetermined overhead rate. (Round youranswer to 2 decimal places.)

2.	Calculate the amount of applied manufacturing overhead.

3.	Calculate actual manufacturing overhead costs.

4.	Compute over- or underapplied overhead.

cerisejackal589

ACC 312 Study Guide - Midterm Guide: Deutsche Luft Hansa

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