Note : the Answer should be Computerized Solved Section 2 (5 Marks) [CLO 2] The

Question

Note : the Answer should be Computerized Solved

Section 2 (5 Marks) [CLO 2] The management of YWZ Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year. The company's controller has provided an example to illustrate how this new system would work. Estimated activ Capacity Actual activity for the year Manufacturing overhead (all fixed) ity for the upcoming ye 76,000 machine-hours 94,000 machine-hours 82,800 machine-hours ar S 5,572,320 per year Job Q58A, which required 130 machine-hours, is one of the jobs worked on during the year.

Explanation / Answer

Predetermined Overhead rate=Manufacturing overhead/estimated hour

=5572320/76000

=$73.32

2. Job Q58A Overhead:

Overhead=73.32*130

=$95,316

3.Predetermined overhead rate: (Based on activity at capacity)

Predetermined Overhead rate=Manufacturing overhead/estimated hour

=5572320/94000

=$59.28

4.Job Q58A Overhead:

Overhead=59.28*130

=$7,706

5.Cost of unused capacity:

=55723320/94000*(94000-82800)

=59.28*11200

=$663,936

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