Avatar Corporation uses a predetermined rate to apply the surcharge. At the beginning of the year, Avatar estimated its overhead costs at $240,000, direct labor hours at 40,000, and machine hours at 10,000. Actual overhead incurred was $249,280, actual direct labor hours were 41,000, and actual machine hours were 11,000.

What is the default speed per machine hour for Avatar?  

 Sonor Systems undertakes its own machine maintenance. The depreciation on the equipment is $20,000 per year and operating cost is $2 per machine hour. Last year 275,000 machine hours were used to produce 100,000 units.

  If 300,000 machine hours had been worked last year, what would be the total machine maintenance cost? 

The Roan plant of the Texas Company has two production departments: Extrusion and Assembly. The plant produces two products: P and Q. Cost information for the production departments is given below:

Extrusion $360,000

Assembly 750,000

The following table presents activity information about the departments and products:

Extrusion Assembly Total

Direct labor hours:

P 10,000 20,000 30,000

Q 10,000 30,000 40,000

Total 20,000 50,000 70,000

Machine hours:

P 5,000 1,000 6,000

Q 15,000 2,000 17,000

Total 20,000 3,000 23,000

Required: Compute the predetermined overhead rate for each department if Extrusion uses machine hours and Assembly uses labor hours. (Be sure to show all work to receive full credit)

QUESTION 7

Define AND provide an example of the following for a bakery: (be sure to label each answer clearly) a) Direct tracing b) Allocation c) Driver tracing

Question 8.

Describe the basics of overhead and departmental costing. Please indicate how they are different and which one you think is more accurate and why.