Dura Drums Ltd. (located in Jamaica) experiences wide variation in demand for the 500-litre steel drums it fabricates. The leakproof,rustproof steel drums have a variety of uses, from storing liquids and bulk materials to serving as makeshift musical instruments. Thedrums are made to order and are painted according to the customer's specifications-often in bright patterns and designs. Thecompany is well known for the artwork that appears on its drums. Unit costs are computed on a quarterly basis by dividing eachquarter's manufacturing costs (materials, labour and overhead) by the quarter's production in units. The company's estimated costs, byquarter, for the coming year are as follows:Direct materialsDirect labourManufacturing overheadTotal manufacturing costsNumber of units to be producedEstimated cost per unitQuarterFirst$ 130,000100,000Second Third$260,000 $ 65,000200,000 50,000240,000 320,000 190,000$ 470,000 $ 780,000 $305,00080,000 20,0009.75 $ 15.25 $Predetermined overhead rate40,00011.75 $Fourth$195,000150,000290,000Management finds the variation in unit costs to be confusing and difficult to work with. It has been suggested that the problem lies withmanufacturing overhead, since it is the largest element of cost. Accordingly, you have been asked to find a more appropriate way ofassigning manufacturing overhead cost to units of product. After some analysis, you have determined that the company's overheadcosts are mostly fixed and therefore show little sensitivity to changes in the level of production.per unit$635,00060,00010.58Required:1. What would be the predetermined manufacturing overhead rate for the year on the basis of total units to be produced? (Round youranswer to 2 decimal places.)2. Recompute the company's unit costs in accordance with your recommendations in part (1). (Round "Unit product cost" to 2 decimalplaces.)Check m

Name: Dura Drums Ltd. (located in Jamaica) experiences wide variation in de
Uploaded: 2024-03-20T06:33:06.000Z
Channel: Bartleby
Description: Dura Drums Ltd. (located in Jamaica) experiences wide variation in demand for the 500-litre steel drums it fabricates. The leakproof,rustproof steel drums have a variety of uses, from storing liquids and bulk materials to serving as makeshift musica

Predetermined manufacturing overhead rate is calculated by dividing the total estimated…

Business

Accounting

1. What would be the predetermined manufacturing overhead rate for the year on the basis of total units to be produced? (Round your answer to 2 decimal places.) Predetermined overhead rate per unit 2. Recompute the company's unit costs in accordance with your recommendations in part (1). (Round "Unit product cost" to 2 decimal places.)

1. What would be the predetermined manufacturing overhead rate for the year on the basis of total units to be produced? (Round your answer to 2 decimal places.) Predetermined overhead rate per unit 2. Recompute the company's unit costs in accordance with your recommendations in part (1). (Round "Unit product cost" to 2 decimal places.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

1. How much overhead would have been charged to the company’s Work-in-Process account during the year? 2. Comment on the appropriateness of the company’s cost drivers (i.e., the use of machine hours in Machining and direct-labor cost in Assembly).
A company estimates the following manufacturing costs at the beginning of the period: direct labor, $488,000; direct materials, $204,000; and factory overhead, $137,000. Required: 1. Compute its predetermined overhead rate as a percent of direct labor. 2. Compute its predetermined overhead rate as a percent of direct materials. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute its predetermined overhead rate as a percent of direct labor. Numerator: Overhead Rate Denominator: Overhead Rate = Overhead Rate
Applying Factory Overhead Jernigan Company estimates that total factory overhead costs will be $378,000 for the year. Direct labor hours are estimated to be 27,000. a. For Jernigan Company, determine the predetermined factory overhead rate using direct labor hours as the activity base. If required, round your answer to two decimal places.$fill in the blank fb95c2fa601df9b_1 per direct labor hour b. During August, Jernigan Company accumulated 550 hours of direct labor costs on Job 40 and 520 hours on Job 42. Determine the amount of factory overhead applied to Jobs 40 and 42 in August.$fill in the blank fb95c2fa601df9b_2 c. Prepare the journal entry to apply factory overhead to both jobs in August according to the predetermined overhead rate.
A. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? B. How much of the overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per unit produced for each product?
Before the year began, Brookville Manufacturing estimated that manufacturing overhead for the year would be $176,400 and that 13,300 direct labor hours would be worked. Actual results for the year included the following: Actual manufacturing overhead cost Actual direct labor hours $184,400 14,500 The amount of manufacturing overhead allocated for the year based on direct labor hours would have been ? (Round intermediary calculations to the nearest cent and final answer to the nearest dollar.) A. $176,400. B. $192,270. C. $184,400. OD. $169,139.
A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $351,232 and direct labor hours would be 43,904. Actual factory overhead costs incurred were $391,711, and actual direct labor hours were 51,004. What is the amount of overapplied or underapplied manufacturing overhead at the end of the year? If the contribution margin ratio for France Company is 46%, sales were $452,000, and fixed costs were $100,000, what was the income from operations? Department M had 2,100 units 57% completed in process at the beginning of June, 11,600 units completed during June, and 1,700 units 25% completed at the end of June. What was the number of equivalent units of production for conversion costs for June if the first-in, first-out method is used to cost inventories?
Question: In cost accounting, what is the primary purpose of calculating the predetermined overhead rate? A) To allocate indirect costs to products based on a predetermined formula.B) To determine the actual overhead costs incurred during a specific production period.C) To calculate variable costs associated with each unit of production.D) To assess fixed costs that remain constant regardless of production levels.
Assume (1) estimated direct labor hours used to calculate the predetermined overhead rate = 19,950, (2) the manufacturing overhead applied to production = $105,000, and (3) the total direct labor hours actually worked during the period = 21,000.What is the estimated total manufacturing overhead cost for the period?
calculate the manufacturing overhead rate of the year . round the answer to 2 decimal places
Brothern Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the most recently completed year appear below: Estimates made at the beginning of the year: Estimated machine-hours Estimated variable manufacturing overhead Estimated total fixed manufacturing overhead Actual machine-hours for the year The predetermined overhead rate for the recently completed year was closest to: Multiple Choice O O $6.73 per machine-hour $28.56 per machine-hour $29.05 per machine-hour O $22.32 per machine-hour 35,900 $ 6.73 per machine-hour $ 801,288 33,300
Arabica Manufacturing uses a predetermined overhead allocation rate based on the number of machine hours. At the beginning of the year, it estimated total manufacturing overhead costs to be $1,040,000, total number of direct labor hours to be 4,500, and total number of machine hours to be 24,000 hours. What was the predetermined overhead allocation rate? (Round your answer to the nearest cent.) A. $36.49 per direct labor hour B. $231.11 per machine hour C. $53.33 per direct labor hour D. $43.33 per machine hour
Benson Corporation estimated its overhead costs would be $22,500 per month except for January when it pays the $153,120 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $175,620 ($153,120 + $22,500). The company expected to use 7,900 direct labor hours per month except during July, August, and September when the company expected 9,100 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season. The company's actual direct labor hours were the same as the estimated hours. The company made 3,950 units of product in each month except July, August, and September, in which it produced 4,550 units each month. Direct labor costs were $24.70 per unit, and direct materials costs were $10.00 per unit. Required a. Calculate a predetermined overhead rate based on direct labor hours. b. Determine the total allocated overhead cost for January, March, and August. c. Determine…