Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please help with this question. At the end of the construction year for his business, Martin's uncle Edward is having trouble dealing with the company's
Please help with this question.
At the end of the construction year for his business, Martin's uncle Edward is having trouble dealing with the company's indirect costs as there are just so many of them! To help his uncle (and because he hopes to take over the family business one day). Martin listed a few examples of what he thought would be indirect costs for this compary: glue, nails, staples, drywall compound, and tape. Edward then added supervisor costs, as well as depreciation of the construction trucks, generators, saws, and other equipment, to the list. Unfortunately, the total of these MOH costs, $524,000, significantly exceeded Edward's budgeted MOH of $447,840. In the past, Edward assigned MOH costs to individual jobs based on the direct labor hours of his employees. At the beginning of the year, based on the work he had planned and still hoped to earn at that time, Edward budgeted for 144,000 DL hours. In reviewing the payroll records of his employees. Edward now sees that they actually worked 159.000 hours this year while receiving an average wage of $15 per hour. Wow, business must be good! * Your answer is incorrect. Martin wondered if his uncles should consider a different allocation base, since this construction business is both labor-intensive and material-intensive. Edward agrees and determines that total DM costs incurred for the jobs worked on this year amounted to $1239,000. At the beginning of the ycar, Edward's budgeted DM costs (for the projects he knew about at the time) were $895.680. Determine what the budgeted MOH rate would have been if Edward had used direct material cost as the cost driver. Further, determine applied MOH and under-or overapplied MOH for this scenario. (Round MOH rater answer to 2 decimal placers, e.8. 52.75.)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started