1.The Santa Cruz Candy Company expects to incur overhead of $24,000. Also, the

company expects to incur 300 direct labor hours (which is paid an average of $10 per

hour) and 200 machine hours, in order to produce 2,000 pounds of candy. Using the

information provided, calculate three different overhead rates using three different

allocation bases. In each case, be sure to identify the allocation base.

2.The Santa Cruz Machine Shop allocates overhead based on machine hours, using a

budgeted overhead rate. The budgeted overhead rate is calculated using an estimate of

6,000 machine hours in the denominator, and $60,000 in the numerator. Actual overhead

was $500 less than budgeted. Actual machine hours were 1,500 more than budgeted.

Calculate the misapplied overhead. Be sure to indicate whether this misapplied overhead

is underapplied or overapplied.

3. Following is information for Penquo, Inc., which makes crayons in its Billings, MT

	Budget	Actual
Production (# of boxes of crayons)	1000	800
Total Direct Costs(material & labor)	2000	2400
Total Machine Hours	140	100
Overhead (fixed and variable)	2800	3000

Penquo allocates overhead using a budgeted overhead rate, using machine hours as the

allocation base. The overhead rate is then applied to product based on actual machine

hours incurred. In other words, the company uses a Normal Costing system.

Required:

A) What is the overhead rate?

B) How much overhead would be applied to each box of crayons?

C) What is the actual direct cost of each box of crayons?

4. A factory makes jeans and chinos. Overhead was budgeted at $150,000, but was

actually $132,000. Budgeted production was 10,000 jeans and 5,000 chinos. Actual

production was 10,000 jeans and 2,000 chinos. Overhead is applied using a budgeted

overhead rate, and the allocation base is units of output.

Required:

A) Calculate the overhead rate.

B) How much overhead would be applied to the chinos production line?

C) What is the misapplied overhead? Is it underapplied or overapplied?