tion.compmm.apa Problem 2-22A Predetermined Overhead Rate; Disposition of Undera
ID: 2607034 • Letter: T
Question
tion.compmm.apa Problem 2-22A Predetermined Overhead Rate; Disposition of Underapplied or Overapplied Overhead [LO2-1, LO2-7 Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year Fixed manufacturing overhead cost Variable manufacturing overhead per computer-hour 75,000 $795,000 1.40 During the year, a glut of furniture on the market resulted in cutting back production and a buildup of fumiture in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year 60,000 Manufacturing overhead cost$850,000 Required: 1.Compute the company's predetermined overhead rate for the year per hour 2. Compute the underapplied or overapplied overhead for the year.Explanation / Answer
Under recovery of overhead = $130000
3)
1) The budgeted overhead recovery rate = $795000/75000 +1.4 Overhead recovery rate =$12 per mahine hour 2) Under recovery of overhead =$850000 - (60000 hrs * 12)Under recovery of overhead = $130000
3)
Event General entry Debit Credit 1 COGS A/c Dr. $130000 To Overhead A/c $130000Related Questions
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