Question
Suit Up produces uniforms. The company allocates manufacturing overhead based on the machine hours each job uses. Suit Up reports the following cost data for
Suit Up produces uniforms. The company allocates manufacturing overhead based on the machine hours each job uses. Suit Up reports the following cost data for the past year:
Requirements
1. Compute the predetermined manufacturing overhead rate.
2. Calculate the allocated manufacturing overhead for the past year.
3. Compute the underallocated or overallocated manufacturing overhead. How will this underallocated or overallocated manufacturing overhead be disposed of?
4. How can managers use accounting information to help control manufacturing overhead costs?
Budget Actual
Direct labor hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,100 hours 6,100 hours
Machine hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,400 hours 6,400 hours
Depreciation on salespeople's autos . . . . . . . . . . . . . . . .$22,000 $22,000
Indirect materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $48,000 $50,500
Depreciation on trucks used to deliver uniforms to customers . . . . . . . . . . . . . . . . . . . . . . . $13,500 $11,500
Depreciation on plant and equipment . . . . . . . . . . . $70,000 $71,500
Indirect manufacturing labor . . . . . . . . . . . . . . . . . . . . $42,000 $45,000
Customer service hotline . . . . . . . . . . . . . . . . . . . . . . $19,500 $21,500
Plant utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $19,200 $21,200
Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $71,000 $85,000
Budget Actual Direct labor hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,100 hours 6,100 hours
Machine hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,400 hours 6,400 hours
Depreciation on salespeople's autos . . . . . . . . . . . $22,000 $22,000
Indirect materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . $48,000 $50,500
Depreciation on trucks used to deliver uniforms to customers . . . . . . . . . . . . . . . . . . . . . . . $13,500 $11,500
Depreciation on plant and equipment . . . . . . . . . . . $70,000 $71,500
Indirect manufacturing labor . . . . . . . . . . . . . . . . . . . . $42,000 $45,000
Customer service hotline . . . . . . . . . . . . . . . . . . . . . . $19,500 $21,500
Plant utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $19,200 $21,200
Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $71,000 $85,000
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