Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Chapter 2, Problem 1E
Harris Fabrics computes its plantwide predetermined
Required:
Compute the company’s plantwide predetermined overhead rate for the year.
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Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of
the year, it estimated that 30,000 direct labor-hours would be required for the period's estimated level of production. The company
also estimated $507,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of
$3.00 per direct labor-hour. Harris's actual manufacturing overhead cost for the year was $652,700 and its actual total direct labor
was 30,500 hours.
Required:
Compute the company's plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.)
Predetermined overhead rate
per DLH
Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 20,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $94,000 offixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. Harris’s actual manufacturing overhead cost for the year was $123,900 and its actual total direct labor was 21,000 hours.Required:Compute the company’s plantwide predetermined overhead rate for the year.
Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the
year, it estimated that 29,000 direct labor-hours would be required for the period's estimated level of production. The company also
estimated $598,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $3.00 per
direct labor-hour. Harris's actual manufacturing overhead cost for the year was $745,485 and its actual total direct labor was 29,500
hours.
Required:
Compute the company's plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.)
Chapter 2 Solutions
Introduction To Managerial Accounting
Ch. 2 - What is job-order costing?Ch. 2 - What is absorption costing?Ch. 2 - What is normal costing?Ch. 2 - How is the unit product cost of a job calculated?Ch. 2 - Explain the four-step process used to compute a...Ch. 2 - What is the purpose of the job cost sheet in a...Ch. 2 - Explain why some production costs must be assigned...Ch. 2 - Why do companies use predetermined overhead rates...Ch. 2 - What factors should be considered in selecting an...Ch. 2 - If a company fully allocates all of its overhead...
Ch. 2 - Prob. 11QCh. 2 - What is underapplied overhead? Overapplied...Ch. 2 - What is a plantwide overhead rate? Why are...Ch. 2 - This Excel worksheet relates to the Dickson...Ch. 2 - This Excel worksheet relates to the Dickson...Ch. 2 - This Excel worksheet relates to the Dickson...Ch. 2 - This Excel worksheet relates to the Dickson...Ch. 2 - Sweeten Company bad no jobs in progress at the...Ch. 2 - Sweeten Company bad no jobs in progress at the...Ch. 2 - Sweeten Company bad no jobs in progress at the...Ch. 2 - Sweeten Company bad no jobs in progress at the...Ch. 2 - Sweeten Company bad no jobs in progress at the...Ch. 2 - Sweeten Company bad no jobs in progress at the...Ch. 2 - Sweeten Company bad no jobs in progress at the...Ch. 2 - Sweeten Company bad no jobs in progress at the...Ch. 2 - Sweeten Company bad no jobs in progress at the...Ch. 2 - Sweeten Company bad no jobs in progress at the...Ch. 2 - Sweeten Company bad no jobs in progress at the...Ch. 2 - Sweeten Company bad no jobs in progress at the...Ch. 2 - Sweeten Company bad no jobs in progress at the...Ch. 2 - Sweeten Company bad no jobs in progress at the...Ch. 2 - Sweeten Company bad no jobs in progress at the...Ch. 2 - Harris Fabrics computes its plantwide...Ch. 2 - Luthan Company uses a plant wide predetermined...Ch. 2 - Computing Total Job Costs and Unit Product Costs...Ch. 2 - Computing Total Job Costs and Unit Product Costs...Ch. 2 - Braverman Company has two manufacturing...Ch. 2 - Job-Order Costing for a Service Company Tech...Ch. 2 - Prob. 7ECh. 2 - Newhard Company assigns overhead cost to jobs on...Ch. 2 - Taveras Corporation is currently operating at 50%...Ch. 2 - Prob. 10ECh. 2 - Varying Plantwide Predetermined Overhead Rates...Ch. 2 - Computing Predetermined Overhead Rates and Job...Ch. 2 - Departmental Predetermined Overhead Rates White...Ch. 2 - Prob. 14ECh. 2 - Plantwide and Departmental Predetermined Overhead...Ch. 2 - Plantwide Predetermined Overhead Rates; Pricing...Ch. 2 - Plantwide and Departmental Predetermined Overhead...Ch. 2 - Job-Order Costing for a Service Company Speedy...Ch. 2 - Multiple Predetermined Overhead Rates; Applying...Ch. 2 - Plantwide versus Multiple Predetermined Overhead...Ch. 2 - Plantwide versus Multiple Predetermined Overhead...
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- If a factory operates at 100% of capacity one month, 90% of capacity the next month, and 105% of capacity the next month, will a different cost per unit be charged to the work-in-process account each month for factory overhead assuming that a predetermined annual overhead rate is used?arrow_forwardPatterson Corporation expects to incur 70,000 of factory overhead and 60,000 of general and administrative costs next year. Direct labor costs at 5 per hour are expected to total 50,000. If factory overhead is to be applied per direct labor hour, how much overhead will be applied to a job incurring 20 hours of direct labor? a. 120 b. 260 c. 28 d. 140arrow_forwardColonels uses a traditional cost system and estimates next years overhead will be $480,000, with the estimated cost driver of 240,000 direct labor hours. It manufactures three products and estimates these costs: If the labor rate is $25 per hour, what is the per-unit cost of each product?arrow_forward
- The cost accountant for River Rock Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning February 1 would be 3,150,000, and total direct labor costs would be 1,800,000. During February, the actual direct labor cost totalled 160,000, and factory overhead cost incurred totaled 283,900. a. What is the predetermined factory overhead rate based on direct labor cost? b. Journalize the entry to apply factory overhead to production for February. c. What is the February 28 balance of the account Factory OverheadBlending Department? d. Does the balance in part (c) represent over- or underapplied factory overhead?arrow_forwardBobcat uses a traditional cost system and estimates next years overhead will be $800.000, as driven by the estimated 25,000 direct labor hours. It manufactures three products and estimates the following costs: If the labor rate is $30 per hour, what is the per-unit cost of each product?arrow_forwardBusiness Specialty, Inc., manufactures two staplers: small and regular. The standard quantities of direct labor and direct materials per unit for the year are as follows: The standard price paid per pound of direct materials is 1.60. The standard rate for labor is 8.00. Overhead is applied on the basis of direct labor hours. A plantwide rate is used. Budgeted overhead for the year is as follows: The company expects to work 12,000 direct labor hours during the year; standard overhead rates are computed using this activity level. For every small stapler produced, the company produces two regular staplers. Actual operating data for the year are as follows: a. Units produced: small staplers, 35,000; regular staplers, 70,000. b. Direct materials purchased and used: 56,000 pounds at 1.5513,000 for the small stapler and 43,000 for the regular stapler. There were no beginning or ending direct materials inventories. c. Direct labor: 14,800 hours3,600 hours for the small stapler and 11,200 hours for the regular stapler. Total cost of direct labor: 114,700. d. Variable overhead: 607,500. e. Fixed overhead: 350,000. Required: 1. Prepare a standard cost sheet showing the unit cost for each product. 2. Compute the direct materials price and usage variances for each product. Prepare journal entries to record direct materials activity. 3. Compute the direct labor rate and efficiency variances for each product. Prepare journal entries to record direct labor activity. 4. Compute the variances for fixed and variable overhead. Prepare journal entries to record overhead activity. All variances are closed to Cost of Goods Sold. 5. Assume that you know only the total direct materials used for both products and the total direct labor hours used for both products. Can you compute the total direct materials and direct labor usage variances? Explain.arrow_forward
- Rockford Company has four departmental accounts: Building Maintenance, General Factory Overhead, Machining, and Assembly. The direct labor hour method is used to apply factory overhead to the jobs being worked on in Machining and Assembly. The company expects each production department to use 30,000 direct labor hours during the year. The estimated overhead rates for the year include the following: During the year, both Machining and Assembly used 28,000 direct labor hours. Factory overhead costs incurred during the year follow: In determining application rates at the beginning of the year, cost allocations were made as follows, using the sequential distribution method: Building Maintenance to: General Factory Overhead, 10%; Machining, 50%; Assembly, 40%. General factory overhead was distributed according to direct labor hours. Required: Determine the under- or overapplied overhead for each production department. (Hint: First you must distribute the service department costs.)arrow_forwardQueen Bees Honey, Inc., estimated its annual overhead to be $110,000 and based its predetermined overhead rate on 27,500 direct labor hours. At the end of the year, actual overhead was $106,000 and the total direct labor hours were 29,000. What is the entry to dispose of the over applied or under applied overhead?arrow_forwardPocono Cement Forms expects $900,000 in overhead during the next year. It does not know whether it should apply overhead on the basis of its anticipated direct labor hours of 60,000 or its expected machine hours of 30,000. Determine the product cost under each predetermined allocation rate if the last job incurred $1,550 in direct material cost, 90 direct labor hours, and 75 machine hours. Wages are paid at $16 per hour.arrow_forward
- Ellerson Company provided the following information for the last calendar year: During the year, direct materials purchases amounted to 278,000, direct labor cost was 189,000, and overhead cost was 523,000. During the year, 100,000 units were completed. Required: 1. Calculate the total cost of direct materials used in production. 2. Calculate the cost of goods manufactured. Calculate the unit manufacturing cost. 3. Of the unit manufacturing cost calculated in Requirement 2, 2.70 is direct materials and 5.30 is overhead. What is the prime cost per unit? Conversion cost per unit?arrow_forwardGreen Bay Cheese Company estimates its overhead to be $375,000. It expects to have 125,000 direct labor hours costing $1,500,000 in labor and utilizing 15,000 machine hours. Calculate the predetermined overhead rate using: A. Direct labor hours B. Direct labor dollars C. Machine hoursarrow_forwardA company estimated 50,000 direct labor hours and $450,000 in overhead. The actual overhead was $445,000, and there were 50,500 direct labor hours. What is the predetermined overhead rate, and how much was applied during the year?arrow_forward
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