Question
Four-Square is a carton company. At the beginning of the year, the company estimated annuao overhead costs to be $369600 and direct labor dollars of
Four-Square is a carton company. At the beginning of the year, the company estimated annuao overhead costs to be $369600 and direct labor dollars of $2640000 based on an average rate of $15 per hour. The company uses labor hours as a basis to apply factory overhead.
During the year, the company actually produced and completed 1700 cartons. The compan used $452500 worth of raw materials and actually used 175000 hours at an average rate of $14.50 per direct labor hour to produce those cartons.
A) Given the information above, calculate the product cost, product container, based on your pre-determined overhead application.
At the end of the year, the company actually incurred the following expenses: Shop supervisors salaries of $120000, Employment benefits of production workers of $50000, Factory property taxes $25000, Advertising expense paid at $60 (per box sold), Factory depreciation expense of $40000, Corporate Office Rent of $5500, Production Facility Utility Costs of $100000, and VP of marketing annual bonus of $275000.
B) determine the total value of factory overhead allocation or under allocation, if any at the end of the year
C) explain the effects of the cost of sales and net income during the period bassed on your calculated over or under allocation - before the over/under allocation is expensed
D) give an example of a business decision that may be affected by grossly under or over allocating overhead
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