Question
The Company allocates manufacturing overhead based on the machine hours each job uses. Last year the companys budgetd and actual (incurred) cost were as follows:
The Company allocates manufacturing overhead based on the machine hours each job uses. Last year the companys budgetd and actual (incurred) cost were as follows: 1. Calculate the predetermined manfacturing overhead rate. Carry the rate to four decimal places
2. Calculate the allocatd overhead for the past year
3 Calculate the underallocated or overallocated overhead.
4. If Cost of Goods sold was 346,000 then what is the adjusted Cost of of good sold (taking into account the under or overallocated overhead)?
5. What if the company chose to use direct labor hours as a basis for allocating overhead? what would the overallocated or underallocated overhead amount be?
Budget | Actual | |
Direct labor hours | 7,800 | 6,300 |
Machine hours | 6,700 | 6,800 |
Maintenance on salespeople's autos | $25,500 | $26,400 |
Indirect materials | $49,000 | $53,500 |
Maintenance on trucks used for delivering products to customers | $13,000 | $11,500 |
Maintenance on plant equipment | $65,500 | $67,000 |
Indirect manufacturing labor | $343,500 | $425,000 |
Customer service hotline | $18,500 | $21,300 |
Plant utilities | $28,300 | $29,300 |
Direct labor cost | $68,000 | $67,000 |
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