The expected costs and operating data for two manufacturers are presented below: Aloe Ltd Basil Ltd Units
Question:
The expected costs and operating data for two manufacturers are presented below:
Aloe Ltd | Basil Ltd | |||
Units produced Factory overhead costs Direct labour hours Direct labour cost | 104 000 $499 200 151 600 $996 000 | 83 960 $888 160 164 000 $803 600 |
Aloe Ltd applies factory overhead on the basis of units of production, whereas Basil Ltd uses direct labour hours. During the last financial year, Aloe Ltd produced 109 600 units and incurred factory overhead costs of $528 000, and Basil Ltd’s overhead costs were $860 000, using 174 000 direct labour hours.
Required
A. Calculate the predetermined factory overhead rate for each company.
B. Indicate whether factory overhead was overapplied or underapplied for each company, and by how much.
Step by Step Answer:
Accounting
ISBN: 978-1118608227
9th edition
Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett