Ekpro Products manufactures containment chambers for environmentally friendly in

Question

Ekpro Products manufactures containment chambers for environmentally friendly incinerators. Each chamber is built to customer specifications. Most of the direct labor time is spent on welding activities. Following is the job cost sheet for an incinerator manufactured for Benzate Corporation:

(a) What types of costs do you imagine would be included in factory overhead? If overhead is applied based on direct labor hours, what is the application rate?

Job CostSH.xYG How might ×Y@chegg.comxYT' Defining Fi ×Y UMUC Can ×YD Hormepage ×YD Homepage × poa Principles c × poa Principles c × oa B-19.04Prol XC com × Naqu www.principlesofaccounting.com/chapter19/problems/B-19.04/B-19.04Problem.pdf AppsEducation Banks Bills Doctors Junk Sports for Nicholas Summer Camp Other bookmarks B-19.04 Determining and evaluating applied overhead Ekpro Products manufactures containment chambers for environmentally friendly incinerators. Each chamber is built to customer specifications. Most of the direct labor time is spent on welding activities. Following is the job cost sheet for an incinerator manufactured for Benzate Corporation: Ekpro Job: Job Cost Sheet Benzate Applied Overhead Total Qty. Rate Total Total Direct Labor Direct Material Hours Rate Total Qty. Total OtyUit Total May 8, 20x7 Rod Burner Sandy Sharp Steel May 9, 20x7 Sandy Sharp Applied Overhead $225 $ 12 $800 9 $25 $225 1 $12 12 10 $80 $800 2 $12 24 $ 24 ??360 $360 $360 $1,421 12.00 $261 $800 (a) What types of costs do you imagine would be included in factory overhead? If overhead is applied based on direct labor hours, what is the application rate? (b) Ekpro is considering installation of a robotic machine that will do all welding operations. How might this decision impact the total overhead and the application method? (c) How does the applied overhead relate to the actual overhead? When they are not the same, what happens to the difference? Why is actual overhead not assigned to each job? 12:26 PM 2/17/2016 Search the web and Windows

Explanation / Answer

Factory overhead is the indirect factory-related costs costs incurred during the manufacturing process which does not ithe costs of direct labor and materials.In this case,it would include -

Applied rate is the applied overhead divided by direct labor hours which will be $30. ($360/12)

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