Amberjack Company is trying to decide on an allocation base to use to assign man
ID: 2553415 • Letter: A
Question
Amberjack Company is trying to decide on an allocation base to use to assign manufacturing overhead to jobs. The company has always used dired labor hours to assign manufact products, but it is trying to decide whether it should use a different allocation base such as direct labor dollars or machine hours Actual and estimated data for manufacturing overhead, direct labor cost, direct labor hours, and machine hours for the most recent fiscal year are summanzed here 584,000 S 386,000 S 645,000 S 440,000 Manufacturing overhead cost Direct labor cost Direct labor hours Machine hours 15,500 hours 6,500 hours 17,000 hours 7,500 hours Required: 1. Based on the company's current allocation base (direct labor hours), compute the following a. Predetermined overhead rate. (Round your answer to 2 decimal places.) ed Overhead Rate per direct labor hour b. Applied manufacturing overthead. (Round your intermediate calculations to 2 decimal places and tinal answer to the nearest whole dollar amount c. Over- or underapplied manufacturing overhead. (Round your intermediate calculations to 2 decimai places and final answer to the nearest whole dollar amount) 0? ?? ?? D a O Type here to searchExplanation / Answer
Answer 1-a.
Estimated Manufacturing Overhead = $584,000
Estimated direct labor hours = 15,500
Predetermined Overhead Rate = Estimated Manufacturing Overhead / Estimated direct labor hours
Predetermined Overhead Rate = $584,000 / 15,500
Predetermined Overhead Rate = $37.68 per direct labor hour
Answer 1-b.
Predetermined Overhead Rate = $37.68 per direct labor hour
Actual direct labor hours = 17,000
Manufacturing Overhead applied = Predetermined Overhead Rate * Actual direct labor hours
Manufacturing Overhead applied = $37.68 * 17,000
Manufacturing Overhead applied = $640,560
Answer 1-c.
Actual Manufacturing Overhead = $645,000
Manufacturing Overhead applied = $640,560
Under-applied Manufacturing Overhead = Actual Manufacturing Overhead - Manufacturing Overhead applied
Under-applied Manufacturing Overhead = $645,000 - $640,560
Under-applied Manufacturing Overhead = $4,440
Answer 2-a.
Estimated Manufacturing Overhead = $584,000
Estimated direct labor cost = $386,000
Predetermined Overhead Rate = Estimated Manufacturing Overhead / Estimated direct labor cost
Predetermined Overhead Rate = $584,000 / $386,000
Predetermined Overhead Rate = 151.30% of direct labor cost
Answer 2-b.
Predetermined Overhead Rate = 151.30% of direct labor cost
Actual direct labor cost = $440,000
Manufacturing Overhead applied = Predetermined Overhead Rate * Actual direct labor cost
Manufacturing Overhead applied = 151.30% * $440,000
Manufacturing Overhead applied = $665,720
Answer 2-c.
Actual Manufacturing Overhead = $645,000
Manufacturing Overhead applied = $665,720
Over-applied Manufacturing Overhead = Manufacturing Overhead applied - Actual Manufacturing Overhead
Over-applied Manufacturing Overhead = $665,720 - $645,000
Over-applied Manufacturing Overhead = $20,720
Answer 3-a.
Estimated Manufacturing Overhead = $584,000
Estimated machine hours = 6,500
Predetermined Overhead Rate = Estimated Manufacturing Overhead / Estimated machine hours
Predetermined Overhead Rate = $584,000 / 6,500
Predetermined Overhead Rate = $89.85 per machine hour
Answer 3-b.
Predetermined Overhead Rate = $89.85 per machine hour
Actual machine hours = 7,500
Manufacturing Overhead applied = Predetermined Overhead Rate * Actual machine hours
Manufacturing Overhead applied = $89.85 * 7,500
Manufacturing Overhead applied = $673,875
Answer 3-c.
Actual Manufacturing Overhead = $645,000
Manufacturing Overhead applied = $673,875
Over-applied Manufacturing Overhead = Manufacturing Overhead applied - Actual Manufacturing Overhead
Over-applied Manufacturing Overhead = $673,875 - $645,000
Over-applied Manufacturing Overhead = $28,875
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