2. (6 points) Gonzalez, Inc. manufactures stereo speakers in two factories; one

Question

2. (6 points) Gonzalez, Inc. manufactures stereo speakers in two factories; one in Vandalia, Illinois and another in Merced, California. The Vandalia factory uses direct labor hours (DLHs) for its overhead rate and the Modesto factory uses machine-hours (MHs) for its overhead rate. Information related to both plants for last year is presented below: Vandalia factory Modesto factory $2,580,000 150,000 MHs Estimated amount of allocation base(a) Predetermined overhead rate Actual amount of allocation base .(b) Actual manufacturing overhead... Applied manufacturing overhead.. Under or overapplied overhead (indicate $35 per DLH (d) 145,000 MHs $2,600,000 $4,100,000 $4,200,000 (e) the dollar amount and whether it is over or underapplied). Required: Fill in the lettered blanks above. SHOW YOUR CALCULATIONS BELOW (For (0 partial credit)!

Explanation / Answer

Fill in the blanks :

4200000-4100000 = 100000 Overapplied

2494000-2600000 = 106000 Underapplied

Vandalia company Modesto factory Estimated manufacturing overhead 4025000 2580000 Estimated amount of allocation base 4025000/35 = 115000 DLH 150000 mhs Predetermine overhead rate $35 per DLH 2580000/150000 = $17.20 per Mhs Actual amount of allocation base 4200000/35 = 120000 DLH 145000 mhs Actual manufacturing overhead $4100000 $2600000 Applied manufacturing overhead $4200000 145000*17.2 = $2494000 Under or over applied $100000 Over applied $106000 Under applied

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