When costing a product, job, or service, managers often want to predict, or budget ahead of time, to estimate the outcome. Since the computation is occurring before the actual completion of the activity, actual data is not yet known. Therefore, managers will use data from past years' activity to estimate what a "normal" cost of the activity will be. Normal costing is a method of estimating costs ahead of time and uses a predetermined rate in order to allocate the indirect overhead costs. The predetermined overhead rate is computed using the following formula: Estimated Manufacturing Overhead Predetermined Overhead = Total Estimated # of Direct Labor Hours This estimated rate can then be used to apply overhead to products. Managers will use this information to determine the estimated product cost and other budgeting information. These estimates will later be compared to the actual costs incurred so that managers can understand any unexpected variances. Before you begin this assignment, be sure to review the following video on Number Formatting: Number Formatti A B D 1 Excel Assignment: Predetermined Overhead 2 Chapter 3: Applying Excel 3 4 Data 5 Allocation base 6 Estimated manufacturing overhead cost 7 Estimated total amount of the allocation base 8 Actual manufacturing overhead cost 9 Actual total amount of the allocation base 10 Machine-hours $300,000 75,000 machine-hours $290,000 68,000 machine-hours Enter a formula into each of the cells marked with a ? below. Be sure to format the cells appropriatey. For 11 example, if the cell has a dollar amount in it, then the cell should be formatted for dollars. 12 13 Computation of the predetermined overhead rate 14 Estimated manufacturing overhead cost 15 Estimated total amount of the allocation base 16 Predetermined overhead rate 17 18 Computation of underapplied or overapplied manufacturing overhead 19 Actual manufacturing overhead cost 20 Manufacturing overhead cost applied to Work in Process during the year. Predetermined overhead rate 21 22 23 Actual total amount of the allocation base Manufacturing overhead applied 24 Underapplied (overapplied) manufacturing overhead ? machine-hours ? per machine-hour ? ? per machine-hour ? machine-hours ? 25 26