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QUESTION 17 (20 MARKS) a) Cambridge Corporation has two departments that produce small appliances. Department A allocates manufacturing overhead using machine hours as the cost
QUESTION 17 (20 MARKS) a) Cambridge Corporation has two departments that produce small appliances. Department A allocates manufacturing overhead using machine hours as the cost driver while Department B allocates manufacturing overhead using direct labour cost as the cost driver. Data for April, 2007, are Department A Department IB $300,000 $625,000 5,000 $14,900 $32,000 490 $87,000 S50,000 30,000 $7,000 $3,000 2,200 Estimated manufacturing overhead costs for 2007 Estimated direct labour cost for 2007 Estimated machine hours for 2007 Actual manufacturing overhead costs for April Actual direct labour cost for April Actual machine hours for April i) Determine the predetermined overhead rate for Departments A and B i) Determine the balances of the manufacturing overhead accounts for each department as of (4 marks) April 30, 2007. Indicate whether the amounts represent any over or under allocated overheads. Be sure to show all workings (4 marks) b) The following activities took place in the WIP inventory account of T. Dooley during April: $15,000 $123,000 Beginning balance Direct materials used Total manufacturing labour incurred in April was $ 163,000, 75% of this amount represented direct labour. The predetermined manufacturing overhead ra manufacturing overhead costs for April amounted to $150,000 te is 120% of direct labor cost. Actual Two jobs were completed with total costs of $118,000 and S85,000 respectively. They were sold on account for $258,000 and $150,000 respectively Requirements: i) Using T-Account, compute the balance in WIP inventory account on April 30. ii) Record journal entries for: (4 marks) Direct materials used Total manufacturing labour incurred Assignment of manufacturing labour to the appropriate accounts Allocated manufacturing overhead Completion of jobs Sale of jobs. (Assume T Dooley uses a perpetual inventory system) The disposal of the manufacturing overhead variance marks)
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