16. Erickkson Company uses a predetermined overhead rate based on direct labor h

Question

16. Erickkson Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs for the next year Direct materials Direct labor Rent on factory building Sales salaries Depreciation on factory equipment Indirect labor Production supervisor's salary S 5,000 19,000 16,000 24,000 7,000 11,000 14,000 Erickkson estimates that 24,000 direct labor hours will be worked during the year. The predetermined overhead rate per hour will be (assume the overhead costs identified are the only overhead costs): A) $2.00 B) $2.79 C) S3.00 D) S4.00 17. Precision Company developed a predetermined overhead rate last year of $3 per direct labor hour, based on an estimate of 24,000 direct labor hours to be worked during the year. Actual costs and activity during this year were: Actual manufacturing overhead cost incurred Actual direct labor hours worked $84,000 27,000 The under-or over applied overhead for the year was: A) $3,000 under applied. B) $3,000 over applied. C) $12,000 under applied. D) $12,000 over applied. 18. The following costs were incurred in June: Direct materials Direct labor Manufacturing overhead Selling expenses S37,000 $28,000 S36,000 $12,000 $20,000 Period expenses during the month totaled: A) S133,000. B) $68,000 C) S65,000 D) $32,000.

Explanation / Answer

As per chegg guidelines when there are more than one question then we have to answer first question.

16) calculation of predetermined overhead rate:

Predetermined overhead rate= estimated costs/estimated direct labour hours

Estimated costs= 5000+19000+16000+24000+7000+11000+14000= 96000

Predetermined overhead rate= 96000/24000=4

So correct answer is D)$4.00

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