ACCT1022 Lecture Notes - Lecture 6: Net Income

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greywildebeest867

16 Feb 2017

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Say the total overhead for the year is denoted mfg_oh and allocation is made based on direct labor hours. Say the total direct labor hours that will be consumed by all jobs in the year is denoted dltotal. Then the rate at which you allocate overhead is the overhead rate: ohr = mfg_oh/dltotal. If dlcrates = the direct labor hours consumed by the crates job, then: overhead allocated to the crates job ohcrates = ohr *dlcrates. What is the catch: exact dollar amount of mfg_oh for the period is not known, neither is dl total. Thus, companies work with the predetermined overhead rates (pohrs) The predetermined overhead rate (pohr) used to apply overhead to jobs is determined before the period begins. Pohr = estimated total manufacturing overhead cost for the coming period/estimated total units in the allocation base for the coming period. The predetermined overhead rate (pohr) used to apply overhead to jobs as determined before the period begins.

Related Questions

Collini Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Departmentâs predetermined overhead rate is based on machine-hours and the Customizing Departmentâs predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:

	Machining		Customizing
Machine-hours		17,000		15,000
Direct labor-hours		3,000		6,000
Total fixed manufacturing overhead cost	$	102,000	$	61,200
Variable manufacturing overhead per machine-hour	$	1.70
Variable manufacturing overhead per direct labor-hour			$	4.10

During the current month the company started and finished Job T268. The following data were recorded for this job:

Job T268:	Machining		Customizing
Machine-hours		80		30
Direct labor-hours		30		50
Direct materials	$	720	$	380
Direct labor cost	$	900	$	1,500

The total job cost for Job T268 is closest to:

pucecat409

Deloria Corporation has two production departments, Forming and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Departmentâs predetermined overhead rate is based on machine-hours and the Assembly Departmentâs predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:

	Forming		Assembly
Machine-hours		19,000		15,000
Direct labor-hours		4,000		8,000
Total fixed manufacturing overhead cost	$	129,200	$	77,600
Variable manufacturing overhead per machine-hour	$	1.60
Variable manufacturing overhead per direct labor-hour			$	3.00

During the current month the company started and finished Job T288. The following data were recorded for this job:

Job T288:	Forming		Assembly
Machine-hours		80		10
Direct labor-hours		30		40
Direct materials	$	730	$	380
Direct labor cost	$	900	$	1,200

The total amount of overhead applied in both departments to Job T288 is closest to:

yellowalpaca70

WoodGrain Technology makes home office furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Preparation Department is based on machine hours, and the rate in the Fabrication Department is based on direct labor-hours. At the beginning of the year, the companyâs management made the following estimates for the year:

	Department
	Preparation		Fabrication
Machine-hours		83,000		39,000
Direct labor-hours		38,500		59,000
Direct materials cost	$	191,000	$	201,000
Direct labor cost	$	286,000	$	523,000
Fixed manufacturing overhead cost	$	282,200	$	560,500
Variable manufacturing overhead per machine-hour	$	2.20		-
Variable manufacturing overhead per direct labor-hour		-	$	4.20

Job 127 was started on April 1 and completed on May 12. The company's cost records show the following information concerning the job:

	Department
	Preparation			Fabrication
Machine-hours		370		72
Direct labor-hours		71		130
Direct materials cost	$	944	$	1,160
Direct labor cost	$	730	$	1,000

Requred:

1. Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department. (Round predetermined overhead rate to 2 decimal places.)

2. Compute the total overhead cost applied to Job 127. (Round predetermined overhead rate to 2 decimal places and round your final answer to nearest whole dollar.)

3-a. What would be the total cost recorded for Job 127? (Round your predetermined overhead rate and intermediate calculations to 2 decimal places and round your final answer to nearest whole dollar.)

3-b. If the job contained 32 units, what would be the unit product cost? (Round predetermined overhead rate and final answer to 2 decimal places.)

4. At the end of the year, the records of WoodGrain Technology revealed the following actual cost and operating data for all jobs worked on during the year: (Round predetermined overhead rate to 2 decimal places.)

	Department
	Preparation		Fabrication
Machine-hours		82,700		23,500
Direct labor-hours		33,000		56,000
Direct materials cost	$	160,200	$	421,000
Manufacturing overhead cost	$	473,320	$	731,600

What was the amount of underapplied or overapplied overhead in each department at the end of the year?

coppercattle818

ACCT1022 Lecture Notes - Lecture 6: Net Income

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