3. Application of Overhead Costs 3A) CMA Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. Estimated and actual data for direct labor and manufacturing overhead last year are as follows: Manufacturing overhead Direct labor hours Estimated P 720,000 600,000 What was the manufacturing overhead for CMA Company for last year? a. Over-applied by P 20,000 c. Over-applied by P 40,000 d. Under-applied by P 40,000 b. Under-applied by P 20,000 Activity 1 Activity 2 Activity 3 3B) CIA Company uses activity-based costing to compute product costs for external reports. The company has three activity centers and applies overhead using predetermined overhead rates for each activity center. Estimated costs and activities for the current year are presented below: Estimated Overhead Cost Expected Activity P 18,000 P 57,600 P 97,200 Actual costs and activities for the current year were as follows: Activity 1 Activity 2 Activity 3 Actual P 700,000 550,000 P 19,500 P 65,000 P 90,000 1,200 2,400 3,600 Actual Overhead Cost Actual Activity 1,250 2,500 3,750 What was the amount of overhead applied for Activity 2 during the year? a. P 5,000 over-applied b. P 5,000 under-applied C. P 4,800 over-applied d. P 4,800 under-applied
3. Application of Overhead Costs 3A) CMA Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. Estimated and actual data for direct labor and manufacturing overhead last year are as follows: Manufacturing overhead Direct labor hours Estimated P 720,000 600,000 What was the manufacturing overhead for CMA Company for last year? a. Over-applied by P 20,000 c. Over-applied by P 40,000 d. Under-applied by P 40,000 b. Under-applied by P 20,000 Activity 1 Activity 2 Activity 3 3B) CIA Company uses activity-based costing to compute product costs for external reports. The company has three activity centers and applies overhead using predetermined overhead rates for each activity center. Estimated costs and activities for the current year are presented below: Estimated Overhead Cost Expected Activity P 18,000 P 57,600 P 97,200 Actual costs and activities for the current year were as follows: Activity 1 Activity 2 Activity 3 Actual P 700,000 550,000 P 19,500 P 65,000 P 90,000 1,200 2,400 3,600 Actual Overhead Cost Actual Activity 1,250 2,500 3,750 What was the amount of overhead applied for Activity 2 during the year? a. P 5,000 over-applied b. P 5,000 under-applied C. P 4,800 over-applied d. P 4,800 under-applied
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:3. Application of Overhead Costs
3A) CMA Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing
overhead to jobs. Estimated and actual data for direct labor and manufacturing overhead last year are
as follows:
Manufacturing overhead
Direct labor hours
Estimated
P 720,000
600,000
What was the manufacturing overhead for CMA Company for last year?
a. Over-applied by P 20,000
c. Over-applied by P 40,000
d. Under-applied by P 40,000
b. Under-applied by P 20,000
Activity 1
Activity 2
Activity 3
3B) CIA Company uses activity-based costing to compute product costs for external reports. The company
has three activity centers and applies overhead using predetermined overhead rates for each activity
center. Estimated costs and activities for the current year are presented below:
Estimated Overhead Cost Expected Activity
P 18,000
P 57,600
P 97,200
Actual costs and activities for the current year were as follows:
Activity 1
Activity 2
Activity 3
Actual
P 700,000
550,000
P 19,500
P 65,000
P 90,000
1,200
2,400
3,600
Actual Overhead Cost Actual Activity
1,250
2,500
3,750
What was the amount of overhead applied for Activity 2 during the year?
a. P 5,000 over-applied
b. P 5,000 under-applied
C. P 4,800 over-applied
d. P 4,800 under-applied
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