Predetermined Overhead Rate, Applied Overhead, Unit Cost Ripley, Inc., costs pro

Question

Predetermined Overhead Rate, Applied Overhead, Unit Cost

Ripley, Inc., costs products using a normal costing system. The following data are available for last year:

Overhead is applied on the basis of direct labor hours.

Required:

1. What was the predetermined overhead rate?
$ per direct labor hour

2. What was the applied overhead for last year?
$

3. Was overhead over- or underapplied, and by how much?
Underapplied overhead = $

4. What was the total cost per unit produced? (Carry your answer to four significant digits.)
$ per unit

Budgeted:       Overhead      $263,200       Machine hours      89,000       Direct labor hours      9,400 Actual:       Overhead      $262,400       Machine hours      87,300       Direct labor hours       9,100       Prime cost      $1,185,200       Number of units      160,000

Explanation / Answer

1. What was the predetermined overhead rate?

Predetermine overhead rate = 263200/9400 = 28 per labour hour

2. Applied overhead = 9100*28 = 254800

3. Under applied overhead = 254800-262400 = 7600

4) Total cost per unit = (1185200+254800/160000) = 9 per unit

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