Question
Estimated or budgeted cost and operating data for three companies for 2015 are given below: Company X Company Y Company Z Units to be produced
Estimated or budgeted cost and operating data for three companies for 2015 are given below:
Company X Company Y Company Z
Units to be produced 10,000 8,000 12,000
Machine- hours 50,000 10,000 6,000
Direct labour- hours 12,000 16,000 36,000
Direct labour cost $48,000 $64,000 $150,000
Factory overhead cost 150,000 40,000 60,000
Predetermined overhead rates are calculated on the following bases in the three companies:
Overhead rate based on
Company X Machine-hours
Company Y Direct labour-hours
Company Z Direct labour cost
Required:
a. Calculate the predetermined overhead rate to be used in each company during 2015.
b. Assume that three jobs are worked on during 2015 in company X. Machine-hours recorded by jobs are: job 23, 21,000 hours; job 29, 16,000 hours; and job 31, 11,000 hours. How much overhead will the company apply to work in process? If actual overhead costs total $149,000 for 2015, will overhead be over- or under-applied? By how much?
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