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a2 Savallas Company is highly automated and uses computers to control manufacturing operations. company uses a job-order costing system and applies manufacturing overhead cost to produ based on computer-hours. The following estimates were used in preparing the predetermir overhead rate at the beginning of the year: Computer-hours.. 85,000 Fixed manufacturing overhead cost... Variable manufacturing overhead per computer-hour.. . $3.00 $1,275,000 During the year, a severe economic recession resulted in cutting back production and a build-up inventory in the company's warehouse. The company's cost records revealed the following act cost and operating data for the year: Computer-hours... Manufacturing overhead cost. Inventories at year-end: .... 60,000 .$1,350,000 Raw materials... Work in process.. Finished goods... Cost of goods sold. $400,000 $160,000 .$1,040,000 . $2,800,000 Required: Compute the dotermined overbee

a2 Savallas Company is highly automated and uses computers to control manufacturing operations. company uses a job-order costing system and applies manufacturing overhead cost to produ based on computer-hours. The following estimates were used in preparing the predetermir overhead rate at the beginning of the year: Computer-hours.. 85,000 Fixed manufacturing overhead cost... Variable manufacturing overhead per computer-hour.. . $3.00 $1,275,000 During the year, a severe economic recession resulted in cutting back production and a build-up inventory in the company's warehouse. The company's cost records revealed the following act cost and operating data for the year: Computer-hours... Manufacturing overhead cost. Inventories at year-end: .... 60,000 .$1,350,000 Raw materials... Work in process.. Finished goods... Cost of goods sold. $400,000 $160,000 .$1,040,000 . $2,800,000 Required: Compute the dotermined overbee

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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a2 Savallas Company is highly automated and uses computers to control manufacturing operations. The company uses a job-order costing system and applies manufacturing overhead cost to products based on computer-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year: Computer-hours Fixed manufacturing overhead cost... Variable manufacturing overhead per computer-hour.... $3.00 ..85,000 $1,275,000 During the year, a severe economic recession resulted in cutting back production and a build-up of inventory in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year: Computer-hours... Manufacturing overhead cost... Inventories at year-end: Raw materials... Work in process. Finished goods.. Cost of goods sold. .... 60,000 .$1,350,000 $400,000 $160,000 .$1,040,000 $2,800,000 Required: a. Compute the company's predetermined overhead rate for the year. b. Compute the underapplied or overapplied overhead for the year.
Transcribed Image Text:a2 Savallas Company is highly automated and uses computers to control manufacturing operations. The company uses a job-order costing system and applies manufacturing overhead cost to products based on computer-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year: Computer-hours Fixed manufacturing overhead cost... Variable manufacturing overhead per computer-hour.... $3.00 ..85,000 $1,275,000 During the year, a severe economic recession resulted in cutting back production and a build-up of inventory in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year: Computer-hours... Manufacturing overhead cost... Inventories at year-end: Raw materials... Work in process. Finished goods.. Cost of goods sold. .... 60,000 .$1,350,000 $400,000 $160,000 .$1,040,000 $2,800,000 Required: a. Compute the company's predetermined overhead rate for the year. b. Compute the underapplied or overapplied overhead for the year.
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