Window Help Untitled Edited Regular 12aBIUE1.0 1. X Company began manufacturing

Question

Window Help Untitled Edited Regular 12aBIUE1.0 1. X Company began manufacturing operations on January 1. The following information is for the year: Direct materials purchased Direct materials used Direct labor 6,984 5,738 $11,634 As of December 31, all jobs were finished, but there were five jobs that were not sold, with costs totalling $1,434. Cost of Goods Sold for the year was $39,466. What was overhead for the year? 2.X Company has the following estimated costs for the year: Direct materials Direct labor Factory supplies Factory maintenance Advertising Factory rent Sales salaries Factory insurance $59,300 28,900 21,500 29,200 41,400 48,900 45,000 67,500 X Company estimates that direct labor hours for the year will be 1,700, and machines will be operated for 60,000 hours. If overhead is allocated on the basis of direct labor hours, what will the overhead rate be? 3. X Company uses an activity-based costing overhead allocation system. It has identified three activities and three cost drivers. The activities and budgeted costs are as follows: Activity Setup Product Testing Machine Maintenance Budgeted Cost $113,000 $55,000 $61,000 The following cost driver information is available for the company's only two products, A and B Cost Driver setup hours Product A Product B

Explanation / Answer

Since, multiple questions have been posted and each question is independent of another, I have answered the first two.

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Question 1:

The value of overheads for the year can be derived with the use of following equation:

Cost of Goods Sold = (Direct Material Used + Direct Labor + Manufacturing Overhead) + Opening WIP - Closing WIP + Opening Finished Jobs - Closing Finished Jobs

Substituting values in the above formula, we get,

39,466 = (5,738 + 11,634 + Manufacturing Overhead) + 0 - 0 + 0 - 1,434

Rearranging Values, we get,

Manufacturing Overhead = 39,466 - 5,738 - 11,634 + 1,434 = $23,528

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Question 2:

The overhead rate on the basis of direct labor hours is calculated as below:

Overhead Rate = (Total Manufacturing Overhead)/Direct Labor Hours

Using the information provided in the question in the above formula, we get,

Total Manufacturing Overhead = 21,500 (Factory Supplies) + 29,200 (Factory Maintenance) + 48,900 (Factory Rent) + 67,500 (Factory Insurance) = $167,100

Now, we can calculate the overhead rate as follows:

Overhead Rate = 167,100/1,700 = $98.29 per direct labor hour

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