Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Old Line Company uses Normal Costing. The company has one service department (M) and two production departments (P1 and P2). The service department allocates

image text in transcribed

The Old Line Company uses Normal Costing. The company has one service department (M) and two production departments (P1 and P2). The service department allocates costs to P1 and P2 using machine hours in those departments. The service department charges variable costs and fixed costs separately. Both production departments use direct labor hours to compute their predetermined overhead rates. The budgeted costs in Department M for 2020 are $112,000 Variable and $256,000 fixed. Data for the production departments for 2020 are shown below. Description Department P1 Department P2 Budgeted Machine Hours 27,000 MH 5,000 MH Maximum Machine Hours 30,000 MH 10,000 MH Budgeted Departmental OH Cost $453,500 $150,500 Budgeted Direct Labor Hours 100,000 DLH 40,000 DLH The production department overhead costs above do NOT include service cost allocations. TASK ONE: 8 points Compute the Predetermined Overhead Rate (POHR) in P1 for 2020. Please show your work to receive credit. TASK TWO: 8 points Refer to Task 1. The actual overhead incurred in Department M during 2020 was $108,000 in variable cost and $240,000 in fixed costs. There were 52,000 actual machine hours and 96,000 actual direct labor hours in Department P1 during 2020. There were 8,000 actual machine hours and 38,000 actual direct labor hours in Department P2 during 2020. The actual overhead incurred in the production departments (before service cost allocations) were $650,000 for Department P1 and $220,400 in Department P2

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting For Executives And MBAs

Authors: Paul Simko, James Wallace, Joseph Comprix

5th Edition

1618533665, 9781618533661

More Books

Students also viewed these Accounting questions

Question

Compare and contrast cultural preferences for online privacy

Answered: 1 week ago

Question

Provide examples of the various microcultures in the United States

Answered: 1 week ago