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Accounting (51)
ACCTG322 (11)
Chapter 3

Chapter 3.pdf

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Department
Accounting
Course
ACCTG322
Professor
Trish Stringer
Semester
Winter

Description
Chapter 3 – Solutions to Recommended Questions Problem 3-22 1. Research & Documents predetermined overhead rate: Predetermined Estimated total overhead cost = overhead rate Estimated total amount of the allocation base $700,000 = 20,000 hours =$35 per hour Litigation predetermined overhead rate: Predetermined = Estimated total manufacturing overhead cost Overhead rate Estimated total amount of the allocation base = $320,000 $800,000 = 40% of Direct lawyer cost 2. Research & Documents overhead applied: 18 hours × $35 per hour......................................$ 630...................... Litigation overhead applied: $2,100 × 40%.........................840.......... Total overhead cost............................................$1,470.......................... 3. Total cost of Case 618–3: Departments Research & Documents Litigation Total Materialsandsupplies....................$ 50... $ 30 $ 80 Direct attorney cost ........................410.... 2,100 2,510 Overhead cost applied........................630 840 1,470 Total cost................................$1,090......... $2,970 $4,060 Page 1 of 6 Chapter 3 – Solutions to Recommended Questions Problem 3-22 (continued) 4. Department Research & Documents Litigation Departmental overhead cost incurred.........................$770,000 $300,000 Departmental overhead cost applied: 23,000 hours × $35 per hour................................805,000. $725,000 × 40%........................................................... 290,000 Underapplied (or overapplied) overhead......................$ (35,000) $ 10,000 Page 2 of 6 Chapter 3 – Solutions to Recommended Questions Problem 3-26 Note: keep in mind that when you are preparing financial information you will not have the ac- tual numbers until AFTER the period/year is complete. When doing problems in accounting you are given all the information up front. Please ignore the actual numbers when doing calculations based on “applied” overhead. 1. a. Predetermined = Estimated total manufacturing overhead cost Overhead rate Estimated total amount of the allocation base = $126,000 $84,000 direct labour cost = 150% Direct labour cost b. Actual manufacturing overhead costs: Insurance, factory.............................................................. Depreciation of equipment................................................ Indirect labour................................................................... Property taxes.................................................................... Maintenance ...................................................................... Rent, building.................................................................... Total actual costs .................................................................. Applied manufacturing overhead costs: $80,000 × 150%................................................................ Underapplied overhead......................................................... 2. Pacific Manufacturing Company Schedule of Cost of Goods Manufactured Direct materials: Raw materials inventory, beginning ...................................$ 21,000 Add purchases of raw materials.........................................133,000 Total raw materials available..........................................154,000 Deduct raw materials inventory, ending .............................
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