Overhead Cost Logan Company Clayton Company Logan Company and Clayton Company as

Question

Overhead Cost Logan Company Clayton Company Logan Company and Clayton Company assign manufacturing overhead to Work in Process Inventory using direct labor cost. The following information is available for the companies for the year: Actual direct labor cost Estimated direct labor cost Actual manufacturing overhead cost Estimated manufacturing overhead cost Logan Company $200,000 187,500 72,500 75,000 Claytorn Company $112,500 125,000 95,000 100,000 Required a. Compute the predetermined overhead rate for each company b. Determine the amount of overhead cost that would be applied to Work in Process Inventory for each company c. Compute the amount of overapplied or underapplied manufacturing overhead cost for each company Complete this question by entering your answers in the tabs below Required A Required B Required C Compute the predetermined overhead rate for each company. (Round your answers to 2 decimal places.) Predetermined Overhead Logan Company Clayton Company direct labor dollar direct labor dollar

Explanation / Answer

Part 1 - Logan company :- Estimated mfg. OH cost / Estimated DL cost = 75000 / 187500 = $ 0.4 per DL dollar

Clayton company :- Estimated mfg. OH cost / Estimated DL cost = 100000 / 125000 = $ 0.8 per DL dollar

Part 2 - Logan company :-  Actual DL cost * predetermined OH rate = 200000 * 0.4 = $ 80000

Clayton company :- 112500 * 0.8 = $ 90000

Part 3 - Logan company :- Actual OH - applied OH = 72500 - 80000 = $ 7500 ( overapplied )

Clayton company :- 95000 - 90000 = $ 5000 ( underapplied )

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