Question
Company produces a product that passes through two departments: Department 1 and Department 2. Test Company determines product cost using a normal cost system. The
-
Company produces a product that passes through two departments: Department 1 and Department 2. Test Company determines product cost using a normal cost system. The company applies overhead using departmental overhead rates. Overhead in Department 1 is applied based on machine hours. Overhead in Department 2 is applied based on direct labor hours. The company prepared the following estimates at the beginning of the year.
Department 1
Department 2
Total
Prime cost
$375,000
$700,000
$1,075,000
Overhead cost
$420,000
$240,000
$660,000
Direct labor hours
16,000
50,000
66,000
Machine hours
100,000
20,000
120,000
During the year, Company reported the following actual results.
Department 1
Department 2
Total
Prime cost
$475,000
$850,000
$1,325,000
Overhead cost
$450,000
$300,000
$750,000
Direct labor hours
20,000
60,000
80,000
Machine hours
125,000
25,000
150,000
Calculate the predetermined overhead rate Company uses to apply overhead in Department 1.
$4.20 per machine hour
$3.60 per machine hour
$26.25 per direct labor hour
$6.60 per machine hour
QUESTION 6
THE FOLLOWING INFORMATION IS USED FOR QUESTIONS 5 9.
Company produces a product that passes through two departments: Department 1 and Department 2. Company determines product cost using a normal cost system. The company applies overhead using departmental overhead rates. Overhead in Department 1 is applied based on machine hours. Overhead in Department 2 is applied based on direct labor hours. The company prepared the following estimates at the beginning of the year.
| Department 1 | Department 2 | Total | |
| Prime cost | $375,000 | $700,000 | $1,075,000 |
| Overhead cost | $420,000 | $240,000 | $660,000 |
| Direct labor hours | 16,000 | 50,000 | 66,000 |
| Machine hours | 100,000 | 20,000 | 120,000 |
During the year, Company reported the following actual results.
| Department 1 | Department 2 | Total | |
| Prime cost | $475,000 | $850,000 | $1,325,000 |
| Overhead cost | $450,000 | $300,000 | $750,000 |
| Direct labor hours | 20,000 | 60,000 | 80,000 |
| Machine hours | 125,000 | 25,000 | 150,000 |
Calculate the overhead applied to production in Department 1 for the year.
QUESTION 7
-
THE FOLLOWING INFORMATION IS USED FOR QUESTIONS 5 9.
Test Company produces a product that passes through two departments: Department 1 and Department 2. Test Company determines product cost using a normal cost system. The company applies overhead using departmental overhead rates. Overhead in Department 1 is applied based on machine hours. Overhead in Department 2 is applied based on direct labor hours. The company prepared the following estimates at the beginning of the year.
Department 1
Department 2
Total
Prime cost
$375,000
$700,000
$1,075,000
Overhead cost
$420,000
$240,000
$660,000
Direct labor hours
16,000
50,000
66,000
Machine hours
100,000
20,000
120,000
During the year, Test Company reported the following actual results.
Department 1
Department 2
Total
Prime cost
$475,000
$850,000
$1,325,000
Overhead cost
$450,000
$300,000
$750,000
Direct labor hours
20,000
60,000
80,000
Machine hours
125,000
25,000
150,000
Calculate the predetermined overhead rate Test Company uses to apply overhead in Department 2.
$12.00 per machine hour
$4.80 per direct labor hour
$13.20 per direct labor hour
$5.00 per direct labor hour
QUESTION 8
Test Company produces a product that passes through two departments: Department 1 and Department 2. Test Company determines product cost using a normal cost system. The company applies overhead using departmental overhead rates. Overhead in Department 1 is applied based on machine hours. Overhead in Department 2 is applied based on direct labor hours. The company prepared the following estimates at the beginning of the year.
| Department 1 | Department 2 | Total | |
| Prime cost | $375,000 | $700,000 | $1,075,000 |
| Overhead cost | $420,000 | $240,000 | $660,000 |
| Direct labor hours | 16,000 | 50,000 | 66,000 |
| Machine hours | 100,000 | 20,000 | 120,000 |
During the year, Test Company reported the following actual results.
| Department 1 | Department 2 | Total | |
| Prime cost | $475,000 | $850,000 | $1,325,000 |
| Overhead cost | $450,000 | $300,000 | $750,000 |
| Direct labor hours | 20,000 | 60,000 | 80,000 |
| Machine hours | 125,000 | 25,000 | 150,000 |
Calculate the overhead applied to production in Department 2 for the year.
QUESTION 9
Test Company produces a product that passes through two departments: Department 1 and Department 2. Test Company determines product cost using a normal cost system. The company applies overhead using departmental overhead rates. Overhead in Department 1 is applied based on machine hours. Overhead in Department 2 is applied based on direct labor hours. The company prepared the following estimates at the beginning of the year.
#9Calculate the total overhead variance for the year.
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External Audit Auditing Business Functions And Assets
Authors: Bart Rohman
1st Edition
B0B5NR6TB6, 979-8839201767
