Cocoa Company is a manufacturing company that uses a job-order costing system. T

Question

Cocoa Company is a manufacturing company that uses a job-order costing system. The company uses machine hours to apply overhead to work in process. On December 1, Cocoa Company’s management estimated that it would incur $500,000 in manufacturing overhead costs and 56,000 machine hours over the coming year. Assume that the company uses only 54,000 machine hours over the year and incurs the following manufacturing costs: Maintenance 55,000 Depreciation 105,000 Indirect Materials 75,000 Utilities 160,000 Insurance 95,000 Indirect Labor 65,000 Compute (a) the company’s predetermined overhead rate for the year. (b) Compute the amount of overhead that was applied to production and the amount over or under applied for the period.

Explanation / Answer

Statement showing computations Particulars Amount Estimated Manufacturing Overhead           500,000.00 Estimated Machine hours =               56,000.00 Predetermined O/H Rate = 500,000/56,000                        8.93 Actual Machine Hours             54,000.00 Overhead Applied = 54,000 * 8.93           482,142.86 Actual Manufacturing Overhead           555,000.00 Underapplied Overhead               72,857.14 Since Applied is less than Actual overhead is underapplied Statement showing computations Particulars Amount Maintenance               55,000.00 Depreciation           105,000.00 Indirect Materials             75,000.00 Utilities           160,000.00 Insurance             95,000.00 Indirect Labour             65,000.00 Actual Manufacturing Overhead           555,000.00

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.