Austin Company uses a job order cost accounting system. The company\'s executive
ID: 2381333 • Letter: A
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Austin Company uses a job order cost accounting system. The company's executives estimated that direct labor would be $4,160,000 (260,000 hours at $16/hour) and that factory overhead would be $1,560,000 for the current period. At the end of the period, the records show that there had been 240,000 hours of direct labor and $1,260,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead allocation rate? (Round your answer to two decimal places.)
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A production department's output for the most recent month consisted of 17,000 units completed and transferred to the next stage of production and 17,000 units in ending goods in process inventory. The units in ending goods in process inventory were 70% complete with respect to both direct materials and conversion costs. There were 2,400 units in beginning goods in process inventory, and they were 90% complete with respect to both direct materials and conversion costs. Calculate the equivalent units of production for the month, assuming the company uses the weighted average method.
17,000 units
$4.85 per direct labor hour. $6.00 per direct labor hour. $5.52 per direct labor hour. $5.93 per direct labor hour. $6.50 per direct labor hour. Austin Company uses a job order cost accounting system. The company's executives estimated that direct labor would be $4,160,000 (260,000 hours at $16/hour) and that factory overhead would be $1,560,000 for the current period. At the end of the period, the records show that there had been 240,000 hours of direct labor and $1,260,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead allocation rate? A production department's output for the most recent month consisted of 17,000 units completed and transferred to the next stage of production and 17,000 units in ending goods in process inventory. The units in ending goods in process inventory were 70% complete with respect to both direct materials and conversion costs. There were 2,400 units in beginning goods in process inventory, and they were 90% complete with respect to both direct materials and conversion costs. Calculate the equivalent units of production for the month, assuming the company uses the weighted average method.Explanation / Answer
Estimated Overhead cost / No. of estimated labour hours
=1,560,000 / 260,000
=$6 per direct labour hour
Equivalent units of production for the month:
For materials :17,000+11,900(17,000*70%) =28,900 units
For conversion:17,000 + 11,900 (17,000*70%) = 28,900 units
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