Gyllstrom Products, Inc., uses a predetermined overhead rate in its production, assembly, and testing departments. One rate
Question:
Last Year Costs
Machine hours ........ 38,000
Overhead costs
Indirect materials ....... $ 58,000
Indirect labor .......... 25,000
Supervision .......... 41,000
Utilities ............. 11,200
Labor-related costs ....... 9,000
Depreciation, factory ...... 10,500
Depreciation, machinery ..... 27,000
Property taxes .......... 3,000
Insurance ............. 2,000
Miscellaneous overhead ...... 5,000
Total overhead ........$191,700
This year the cost of indirect materials is expected to increase by 30 percent over the previous year. The cost of indirect labor, utilities, machinery depreciation, property taxes, and insurance is expected to increase by 20 percent over the previous year. All other expenses are expected to increase by 10 percent over the previous year. Machine hours for this year are estimated at 45,858.
Required
1. Compute the projected costs, and use those costs to calculate the overhead rate for this year.
2. During this year, the company completed the following jobs using the machine hours shown:
Determine the amount of overhead applied to each job. What was the total overhead applied during this year?
3. Actual overhead costs for this year were $234,000. Was overhead underapplied or overapplied this year? By how much? Should the Cost of Goods Sold account be increased or decreased to reflect actual overhead costs?
4. At what point during this year was the overhead rate computed? When was it applied? Finally, when was underapplied or overapplied overhead determined and the Cost of Goods Sold account adjusted to reflect actualcosts?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Principles of Accounting
ISBN: 978-1133626985
12th edition
Authors: Belverd E. Needles, Marian Powers and Susan V. Crosson
Question Posted: