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Chapter 17: Q19E-a (page 943)

Selected cost data for Classic Print Co. are as follows:

Estimated manufacturing overhead cost for the year

$125,000

Estimated direct labor cost for the year

78,125

Actual manufacturing overhead cost for the year

116,000

Actual direct labor cost for the year

67,000

Requirements

1. Compute the predetermined overhead allocation rate per direct labor dollar.

Short Answer

Expert verified

The predetermined overhead allocation rate per direct labor dollar is $1.60

Step by step solution

01

Labor cost

Labor cost is the total wages including the additional benefits, payroll, etc., paid to the employees of the company for providing services to the company.

02

The predetermined overhead allocation rate per direct labor dollar.

Predeterminedoverheadallocationrate=EstimatedmanufacturingoverheadcostfortheyearEstimateddirectlaborcostfortheyear=$125,00078,125=$1.60

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Most popular questions from this chapter

Following is a list of cost system characteristics and sample companies. Match each to either job order costing or process costing.

b. A company that pulverizes wood into pulp to manufacture cardboard.

Question: The following information pertains to Smith Company for the year:

Estimated manufacturing overhead

\(500,000

Actual manufacturing overhead

\)550,000

Estimated direct labor hours

10,000 hours

Actual direct labor hours

10,500 hours

13. Calculate the predetermined overhead allocation rate using direct labor hours as the allocation base.

14. Determine the amount of overhead allocated during the year. Record the journal entry.

15. Determine the amount of underallocated or overallocated overhead. Record the journal entry to adjust Manufacturing

Overhead.

Explain the terms accumulate, assign, allocate, and adjust as they apply to job order costing.

Following is a list of cost system characteristics and sample companies. Match each to either job order costing or process costing.

j. A governmental agency that takes bids for specific items it utilizes where each item requires a separate bid.

Young Foundry uses a predetermined overhead allocation rate to allocate overhead to individual jobs, based on the machine hours required. At the beginning of 2018, the company expected to incur the following:

Manufacturing overhead costs

\(840,000

Direct labor cost

1,480,000

Machine hours

70,000 hours

At the end of 2018, the company had actually incurred:

Direct labor cost

\)1,230,000

Depreciation on manufacturing plant and equipment

620,000

Property taxes on plant

35,500

Sales salaries

26,000

Delivery driver’s wages

22,500

Plant janitor’s wages

17,000

Machine hours

60,000 hours

Requirements

1. Compute Young’s predetermined overhead allocation rate.
See all solutions

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