Osborn Manufacturing uses a predetermined overhead rate of $20.10 per direct lab
ID: 2419792 • Letter: O
Question
Osborn Manufacturing uses a predetermined overhead rate of $20.10 per direct labor-hour. This predetermined rate was based on a cost formula that estimates $279,390 of total manufacturing overhead for an estimated activity level of 13,900 direct labor-hours.
The company incurred actual total manufacturing overhead costs of $277,000 and 13,400 total direct labor-hours during the period.
Determine the amount of underapplied or overapplied manufacturing overhead for the period.
Assuming that the entire amount of the underapplied or overapplied overhead is closed out to cost of goods sold, what would be the effect of the underapplied or overapplied overhead on the company's gross margin for the period?
Osborn Manufacturing uses a predetermined overhead rate of $20.10 per direct labor-hour. This predetermined rate was based on a cost formula that estimates $279,390 of total manufacturing overhead for an estimated activity level of 13,900 direct labor-hours.
The company incurred actual total manufacturing overhead costs of $277,000 and 13,400 total direct labor-hours during the period.
Determine the amount of underapplied or overapplied manufacturing overhead for the period.
Assuming that the entire amount of the underapplied or overapplied overhead is closed out to cost of goods sold, what would be the effect of the underapplied or overapplied overhead on the company's gross margin for the period?
Explanation / Answer
as on predetermined= 20.1*13400=269,340
Actual applied= $279,390
Over applied=279,390-269,340
=$10,050
Gross margin = will be reduced by 10050
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.