Requirement 2: At the beginning of the year, the company made the following esti
ID: 2358739 • Letter: R
Question
Requirement 2:At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools:
Activity Cost Pool Activity Measure Estimated Overhead Cost Expected Activity
Labor related Direct labor-hours $ 290,000 40,000 DLHs
Purchase orders Number of orders $ 79,500 1,500 orders
Parts management Number of part types $ 120,000 400 part types
Board etching Number of boards $ 320,000 2,000 boards
General factory Machine-hours $ 352,000 80,000 MHs
Requirement 3:
During the year, actual activity was recorded as follows:
Activity Cost Pool Actual Activity
Labor related 41,000DLHs
Purchase orders 1,300 orders
Parts management 420 part types
Board etching 2,150 boards
General factory 82,000 MHs
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Determine the amount of manufacturing overhead cost applied to production for the year. (Omit the "$" sign in your response.)
Activity Cost Pool AppliedOverhead
Labor related $______
Purchase orders ______
Parts management _______
Board etching _______
General factory _______
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Total $ ______
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Requirement 4:
Determine the amount of underapplied overhead cost for the year (Input the amount as positive value. Omit the "$" sign in your response):
Explanation / Answer
3. Manufacturing overhead cost applied to production : In order to calculate the manufacturing overhead cost applied to production we have to determine the predetermine overhead rate first. Predetermined overhead rate = Estimated overhead / estimated activity Let us calculate the overhead applied to various activities; So overhead applied to Direct labor: Predetermined overhead rate = Estimated overhead / estimated activity = $290,000 / 40,000 hours = $7.25 per hour Direct labor overhead applied = Predetermined overhead rate x Actual activity level Predetermined overhead rate = Estimated overhead / estimated activity = $290,000 / 40,000 hours = $7.25 per hour Direct labor overhead applied = Predetermined overhead rate x Actual activity level = $7.25 x 41,000DLHs = $297,250. Overhead applied to Purchase orders: Predetermined overhead rate = Estimated overhead / estimated activity Predetermined overhead rate = Estimated overhead / estimated activity = $ 79,500 / 1,500 orders = $53 per order Purchase orders overhead applied = Predetermined overhead rate x Actual activity level = $53 x 1,300 = $68,900 = $53 x 1,300 = $68,900 Overhead applied to Parts management: Predetermined overhead rate = Estimated overhead / estimated activity Predetermined overhead rate = Estimated overhead / estimated activity = $ 120,000 / 400 part types = $300 per part type. overhead applied = Predetermined overhead rate x Actual activity level = $300 x 420 = $126,000 overhead applied = Predetermined overhead rate x Actual activity level = $300 x 420 = $126,000 = $300 x 420 = $126,000 Overhead applied to Board etching: Predetermined overhead rate = Estimated overhead / estimated activity Predetermined overhead rate = Estimated overhead / estimated activity = $ 320,000 / 2,000 boards = $160 per board overhead applied = Predetermined overhead rate x Actual activity level = $160 x 2,150 = $344,000 Overhead applied to General factory Machine-hours : Predetermined overhead rate = Estimated overhead / estimated activity = $352,000 / 80,000 machine hours = $4.4 per machine hour overhead applied = Predetermined overhead rate x Actual activity level = $4.4 x 82,000 = $360,800 Total manufacturing overhead applied = $297,250 + $68,900 + $126,000 + $344,000 + $360,800 So total manufacturing overhead applied = $1,196,950 = $160 x 2,150 = $344,000 Overhead applied to General factory Machine-hours : Predetermined overhead rate = Estimated overhead / estimated activity = $352,000 / 80,000 machine hours = $4.4 per machine hour overhead applied = Predetermined overhead rate x Actual activity level = $4.4 x 82,000 = $360,800 Total manufacturing overhead applied = $297,250 + $68,900 + $126,000 + $344,000 + $360,800 So total manufacturing overhead applied = $1,196,950 Predetermined overhead rate = Estimated overhead / estimated activity = $352,000 / 80,000 machine hours = $4.4 per machine hour overhead applied = Predetermined overhead rate x Actual activity level = $4.4 x 82,000 = $360,800 Total manufacturing overhead applied = $297,250 + $68,900 + $126,000 + $344,000 + $360,800 So total manufacturing overhead applied = $1,196,950 Predetermined overhead rate = Estimated overhead / estimated activity = $352,000 / 80,000 machine hours = $4.4 per machine hour overhead applied = Predetermined overhead rate x Actual activity level = $4.4 x 82,000 = $360,800 Total manufacturing overhead applied = $297,250 + $68,900 + $126,000 + $344,000 + $360,800 So total manufacturing overhead applied = $1,196,950 4. Underapplied overhead: Estimated total overhead = $290,000 + $79,500 + $120,000 + $320,000 + $352,000 Total overhead = 1,161,500 Actual overhead applied = $1,196,950 Underapplied overhead = $1,196,950 - $1,161,500 Underapplied overhead = $35,450 Estimated total overhead = $290,000 + $79,500 + $120,000 + $320,000 + $352,000 Total overhead = 1,161,500 Actual overhead applied = $1,196,950 Underapplied overhead = $1,196,950 - $1,161,500 Underapplied overhead = $35,450 Actual overhead applied = $1,196,950 Underapplied overhead = $1,196,950 - $1,161,500 Underapplied overhead = $35,450 Underapplied overhead = $35,450Related Questions
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