y Mode: Ch. 2: Ho Check my Platinum Tracks, Inc. is a small audio recording studio located primarily for radio ads-and has a few singers and bands as making a digital master from which CDs can be copied. The competition in the audio been tough, but that are equipped with more up-to-date equipment and that data concerning the last two years of operations follow in Los Angeles. The company handles work for advertising agencies- clients. Platinum Tracks handles all aspects of recording from editing to recording industry in Los Angeles has always it has been getting even tougher over the last several years. The studio has been losing customers to newer studios are able to offer very attractive prices and excellent service. Summary Last Year This Year Estimated hours of studio service Estimated studio overhead cost Actual hours of studio service provided Actual studio overhead cost incurred Hours of studio service at capacity 130,eee 130,e0 1,450 s 130,e0e s 130,00e 2,600 1,808 1,709 2,600 The company applies studio overhead to recording jobs on the basis of the hours of studio service provided. For example, 44 hours of studio time were required to record, edit, and master the Verde Baja music CD for a local Latino band. All of the studio overhead cost is fixed, and the actual overhead cost incurred was exactly as estimated at the beginning of the year in last year and this year Required 1. Platinum Tracks computes its predetermined overhead rate at the beginning of each year based on the estimated studio overhead cost and the estimated hours of studio service for the year. Using this approach, how much overhead would have been applied to the Verde Baja job last year? How a this year dent of Platinum Tracks has heard that some companies in the industry have changed to a system of computing the ead rate based on the hours of studio service that could be provided at capacity. He would like to know what redetermined overhead effect this method would have on iob costs. How much overhead would have been apolied usina this method to the Verde Baia iob if it Prex 5 of 5 here to search hours of studio service for the year. Using this approach, how much overhead would have been applied to Baja job last year? How about this year? 2. The effect this 3. If would have on job costs. How much would have been applied using this method to the Verde Baja jo capacity as in (2) above, how much unused capacity cost would the company have incurred last year? This year? of Ch. 2: Homework Check my Required: 1. Platinum Tracks computes its predetern ned overhead rate at the beginning of each year based on the estimated studio overhead cost and the estimated hours of studio ser vice for the year. Using this approach, how much overhead would have been applied to the Verde Baja job last year? How about this year? 2. The president of Platinum Tracks has heard that some companies in the industry have changed to a system of computing the predetermined overhead rate based on the hours of studio service that could be provided at capacity. He would like to know what effect this method would have on job costs. How much overhead would have been applied using this method to the Verde Baja job if it had been done last year? This year? 3. If Platinum Tracks computes its predetermined overhead rate based on the hours of studio service that could be provided at capacity as in (2) above, how much unused capacity cost would the company have incurred last year? This year? Required 1 Required 2 Required 3 If Platinum Tracks computes its predetermined overhead rate based on the hours of studio service that could be provided at round your intermediate calculations.) cost would the company have incurred last year? This year? (Do not Cost of capacity
