Brief Exercise 163 (Part Level Submission) Speedy Access Services Inc. leases ac

Question

Brief Exercise 163 (Part Level Submission) Speedy Access Services Inc. leases access to high-speed computers to small businesses. It provides the following information for the year: Budgeted Actual Overhead cost Computer hours Direct labor hours $2,200,000 $2,100,000 90,000 180,000 100,000 200,000 Overhead is applied on the basis of computer hours. Compute the predetermined overhead rate Predetermined overhead rate per computer hour Determine the amount of overhead applied for the year. The amount of overhead applied $

Explanation / Answer

A

Compute the predetermined overhead rate

Budgeted computer hours

$100,000

Budgeted overhead cost

$2,200,000

Ans

predetermined overhead rate = Budgeted overheads/Budgeted overhead costs = (2,200,000/100,000)

$22

B

Determine the amount of overhead applied for the year.

overhead applied for the year = Predetermined overhead rate*Actual computer hours

Computer hours

$90,000

Predetermined overhead rate

$22

Ans

overhead applied for the year = 90,000*22

$1,980,000

A

Compute the predetermined overhead rate

Budgeted computer hours

$100,000

Budgeted overhead cost

$2,200,000

Ans

predetermined overhead rate = Budgeted overheads/Budgeted overhead costs = (2,200,000/100,000)

$22

B

Determine the amount of overhead applied for the year.

overhead applied for the year = Predetermined overhead rate*Actual computer hours

Computer hours

$90,000

Predetermined overhead rate

$22

Ans

overhead applied for the year = 90,000*22

$1,980,000

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