Buker Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below:
The predetermined overhead rate for the recently completed year was closest to:
A.
$22.04
B.
$29.59
C.
$7.67
D.
$29.71
Solution: D
1,630,960 / 74,000 = 22.04
22.04 + 7.67 = 29.71
OR
Total est MOH: Total Variable + Total Fixed Total est Quantity of Allocation Based
(7.67 * 74,000) + 1,630,960 = 29.71
74,000
2.
TEST QUESTION
CR Corporation has the following estimated costs for the next year:
CR Corporation estimates that 20,000 labor-hours will be worked during the year. If overhead is applied on the basis of direct labor-hours, the overhead rate per hour will be:
A.
$2.25
B.
$3.25
C.
$3.45
D.
$4.70
Solution: A
POHR = Total est MOH / Total est Allocation Based Used
15,000 + 8,000 + 10,000 + 12,000 / 20,000 = 2.25
3.
Sawyer Manufacturing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 57,000 actual direct labor-hours and incurred $345,000 of actual manufacturing overhead cost. The Corporation had estimated that it would work 55,000 direct labor-hours during the year and incur $330,000 of manufacturing overhead cost. The Corporation's manufacturing overhead cost for the year was:
A.
Over applied by $15,000
B.
Under applied by $15,000
C.
Over applied by $3,000
D.
Under applied by $3,000
Solution: D
POHR = 330,000 / 55,000 = 6
6 * 57,000 = 342,000
345,000 (Credit Balance) – 342,000 (Debit Balance) = 3,000 (Credit Ending Balance)
MOH = Credit (Under applied) and Debit (Over applied)
4.
Galbraith Corporation applies overhead cost to jobs on the basis of 70% of direct labor cost. If Job 201 shows $28,000 of manufacturing overhead applied, the direct labor cost on the job was:
A.
$40,000
B.
$19,600
C.
$28,000
D.
$36,400