overhead rate based on direct labour hours is used to apply overhead to individu
ID: 2539877 • Letter: O
Question
overhead rate based on direct labour hours is used to apply overhead to individual jobs. An estimate f overhead costs at different volumes was prepared for the current year as follows: Corporation uses a job costing accounting system for its production costs. A predetermined Direct labour hours Variable overhead costs Fixed overhead costs Total overhead 50,000 60.000Z0,000 $350,000 $240,000 $490,000 216,000 $566,000$636,000 $706,000 216,000 216,000 The expected volume is 60,000 direct labor hours for the entire year. The following information is for November, when Jobs 50 and 51 were completed. Beginning inventories as at November 1: Raw materials and supplies Work in process (Job 50) Finished goods $ 10,500 54,000 112,500 Purchases: Raw materials Supplies 135,000 15,000 Materials and supplies requisitioned for production: Job 50 Job 51 Job 52 Supplies 45,000 37,500 25,500 6,000 $114,000 Factory direct labour hours (DLH): Job 50 Job 51 Job 52 3,500 DLH 3,000 DLH 2,000 DLH Labour costs: Direct labour wages (8,500 hours @$8) Indirect labour wages (4,000 hours) Supervisory salaries 68,000 17,000 36,000 Building occupancy costs: Factory maintenance Factory depreciation Factory power & lighting Factory repairs Administration office 6,500 2,500 4,000 1,500 2,500 8,000Explanation / Answer
Q20. Answer is D. $ 10.60 per DLH Explanation: Estimated overheads at 60,000 hours: $ 636.000 Estimated labout hours: 60,000 OH rate: Estimated overheads. Labour hours = 636,000 /600,000 = $1.06 per DLH Q21. Answer is C. $158,500 Explanation: Total cost JOB50: Begnning cost in WIP 54000 Add: material added 45000 Add: labour hours (3500 hors @$8) 28000 Ohz (3500 DLH @9) 31500 Total cost JOB50: 158500 Q22. Answer is A. $18,000 Explanation: Direct labour hours in JOB 52: 2000 DLH OH rate: $9 per DLH Overheads applied(2000 DLH at $9): $ 18,000 Q23 Answer is B. $76500 Explanation: Total DLH worked( 3000+352000) = 8500 hours Overheads applied(8500 hours @$9: $ 76500 Q24. Answer is D. $73500 Explanation: Factory OH incurred: Supplies: 6000 Indirect labour 17000 Supervision 36000 Maintenance 6500 Depreciation 2500 Power and Lighting 4000 Factory repairs 1500 Total OH incurred 73500 Q25. Answer is E. Credit it to cost of goods sold Explanation: Journal entry for overapplied overheads: Factory overheads Account Dr. 1000 Cost of goods sold 1000
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