Budget Actual Direct labor hours . . . . . . . . . . . . . . . . . . . . . . . .

Question

Budget Actual Direct labor hours. . . . . . . . . . . . . . . . . . . . . . . . 7,600 hours 6,100 hours Machine hours. . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 hours 6,500 hours Depreciation on salespeople's autos. . . . . . . . . . . $21,500 $21,500 Indirect materials. . . . . . . . . . . . . . . . . . . . . . . . . $49,000 $54,500 Depreciation on trucks used to deliver uniforms to customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13,000 $10,500 Depreciation on plant and equipment. . . . . . . . . . . $66,000 $67,000 Indirect manufacturing labor. . . . . . . . . . . . . . . . . $39,000 $40,000 Customer service hotline. . . . . . . . . . . . . . . . . . . $19,500 $21,000 Plant utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,000 $37,500 Direct labor cost. . . . . . . . . . . . . . . . . . . . . . . . . $71,000 $86,000 Requirement 1. Compute the predetermined manufacturing overhead rate. Enter the formula for predetermined manufacturing overhead? rate, then compute the rate. Estimated yearly overhead costs / Estimated yearly machine hours = Predetermined overhead rate / = per machine hour Requirement 2. Calculate the allocated manufacturing overhead for the past year. Manufacturing Actual machine hours x Predetermined overhead rate = overhead allocated x = Requirement 3. Compute the underallocated or overallocated manufacturing overhead. How will this underallocated or overallocated manufacturing overhead be disposed? of? First calculate the preliminary manufacturing overhead balance using the? T-account. Manufacturing Overhead Close the? under- or overallocated overhead to Cost of Goods Sold by journalizing the entry.? (Record debits? first, then credits. Exclude explanations from any journal? entries.) Journal Entry Date Accounts Debit Credit Requirement 4. How can managers use accounting information to help control manufacturing overhead? costs? To help control manufacturing? overhead, managers compare the actual line item amounts for ? depreciation on delivery trucks finished goods inventory manufacturing overhead work in process inventory with the budgeted amounts. Managers will also investigate only ? small large differences between actual and budgeted amounts to identify the reasons why actual costs ? are the same as planned or budgeted costs are the same as previous years costs differ from planned or budgeted costs differ from previous years costs Budget Actual Direct labor hours. . . . . . . . . . . . . . . . . . . . . . . . 7,600 hours 6,100 hours Machine hours. . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 hours 6,500 hours Depreciation on salespeople's autos. . . . . . . . . . . $21,500 $21,500 Indirect materials. . . . . . . . . . . . . . . . . . . . . . . . . $49,000 $54,500 Depreciation on trucks used to deliver uniforms to customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13,000 $10,500 Depreciation on plant and equipment. . . . . . . . . . . $66,000 $67,000 Indirect manufacturing labor. . . . . . . . . . . . . . . . . $39,000 $40,000 Customer service hotline. . . . . . . . . . . . . . . . . . . $19,500 $21,000 Plant utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,000 $37,500 Direct labor cost. . . . . . . . . . . . . . . . . . . . . . . . . $71,000 $86,000 Requirement 1. Compute the predetermined manufacturing overhead rate. Enter the formula for predetermined manufacturing overhead? rate, then compute the rate. Estimated yearly overhead costs / Estimated yearly machine hours = Predetermined overhead rate Estimated yearly overhead costs / Estimated yearly machine hours = Predetermined overhead rate Estimated yearly overhead costs / Estimated yearly machine hours Estimated yearly machine hours = Predetermined overhead rate / = per machine hour / = per machine hour / = per machine hour Requirement 2. Calculate the allocated manufacturing overhead for the past year. Manufacturing Actual machine hours x Predetermined overhead rate = overhead allocated x = Manufacturing Actual machine hours x Predetermined overhead rate = overhead allocated x = Manufacturing Actual machine hours Actual machine hours x Predetermined overhead rate = overhead allocated x = Requirement 3. Compute the underallocated or overallocated manufacturing overhead. How will this underallocated or overallocated manufacturing overhead be disposed? of? First calculate the preliminary manufacturing overhead balance using the? T-account. Manufacturing Overhead Manufacturing Overhead Manufacturing Overhead Close the? under- or overallocated overhead to Cost of Goods Sold by journalizing the entry.? (Record debits? first, then credits. Exclude explanations from any journal? entries.) Journal Entry Date Accounts Debit Credit Journal Entry Date Accounts Debit Credit Journal Entry Date Accounts Debit Credit Requirement 4. How can managers use accounting information to help control manufacturing overhead? costs? To help control manufacturing? overhead, managers compare the actual line item amounts for ? depreciation on delivery trucks finished goods inventory manufacturing overhead work in process inventory with the budgeted amounts. Managers will also investigate only ? small large differences between actual and budgeted amounts to identify the reasons why actual costs ? are the same as planned or budgeted costs are the same as previous years costs differ from planned or budgeted costs differ from previous years costs ? depreciation on delivery trucks finished goods inventory manufacturing overhead work in process inventory ? depreciation on delivery trucks finished goods inventory manufacturing overhead work in process inventory ? ? depreciation on delivery trucks finished goods inventory manufacturing overhead work in process inventory depreciation on delivery trucks finished goods inventory manufacturing overhead work in process inventory ? small large ? small large ? ? small large small large ? are the same as planned or budgeted costs are the same as previous years costs differ from planned or budgeted costs differ from previous years costs ? are the same as planned or budgeted costs are the same as previous years costs differ from planned or budgeted costs differ from previous years costs ? ? are the same as planned or budgeted costs are the same as previous years costs differ from planned or budgeted costs differ from previous years costs are the same as planned or budgeted costs are the same as previous years costs differ from planned or budgeted costs differ from previous years costs Budget Actual Direct labor hours. . . . . . . . . . . . . . . . . . . . . . . . 7,600 hours 6,100 hours Machine hours. . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 hours 6,500 hours Depreciation on salespeople's autos. . . . . . . . . . . $21,500 $21,500 Indirect materials. . . . . . . . . . . . . . . . . . . . . . . . . $49,000 $54,500 Depreciation on trucks used to deliver uniforms to customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13,000 $10,500 Depreciation on plant and equipment. . . . . . . . . . . $66,000 $67,000 Indirect manufacturing labor. . . . . . . . . . . . . . . . . $39,000 $40,000 Customer service hotline. . . . . . . . . . . . . . . . . . . $19,500 $21,000 Plant utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,000 $37,500 Direct labor cost. . . . . . . . . . . . . . . . . . . . . . . . . $71,000 $86,000

Explanation / Answer

Solution 1:

Estimated yearly manufactruing overhead = Indirect material + Depreciation on plant and equipment + Indirect labor + Plant utilities

= $49,000 + $66,000 + $39,000 + $35,000 = $189,000

Predetermined overhead rates = Estimated manufacturing overhead / Estimated yearly machine hours

= $189,000 / 7000 = $27 per machine hour

Solution 2:

Allocated manufacturing overhead = Actual machine hours * Pre determined overhead rates

= 6500 * $27 = $175,500

Solution 3:

Underapplied overhead = $23,500

Solution 4:

To help control manufacturing? overhead, managers compare the actual line item amounts for manufacturing overhead with the budgeted amounts. Managers will also investigate only large differences between actual and budgeted amounts to identify the reasons why actual costs differ from planned or budgeted costs.

Manufacturing overhead Particulars Debit Particulars Credit Indirect material $54,500.00 Overhead applied $175,500.00 Depreciation on plant and equipment $67,000.00 Underapplied overhead (Bal Fig) $23,500.00 Indirect manufacturing labor $40,000.00 Plant utilities $37,500.00 Total $199,000.00 Total $199,000.00

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.