6. Nazza Company has the following data related to the first two years of operation. Year 1 Year 2 Actual Data Units produced Units sold 10,000 8,000 $25,000 $20,000 12,000 14,000 $30,000 $24,000 $18,000 2,200 DM used DL $ incurred MOH $ incurred DL hours $15,000 2,000 Estimated Data Units produced 10,000 10,000 $30,000 $25,000 $15,000 2,500 10,000 10,000 $30,000 $25,000 $15,000 2,500 Units sold DM to be used DL $ to be incurred MOH $ to be incurred DL hours Nazza Company has computed the COGS for both Year 1 and Year 2 using actual overhead costs based on actual direct labor hours. The controller is wondering about using an overhead rate based on estimated overhead costs and estimated labor hours. If overhead is applied on estimated costs and estimated labor hours for both Year 1 and Year 2, what would be the difference for Year 2 from the COGS originally computed and this newly computed COGS after any needed adjustments for over- or under-applied overhead? (Note: A "decrease" means that the newly COGS is lower than the original COGS; an "increase" means the reverse.) A. $600 decrease B. $4,800 decrease C. $4,800 increase D. $1,800 increase E. There is no difference.
6. Nazza Company has the following data related to the first two years of operation. Year 1 Year 2 Actual Data Units produced Units sold 10,000 8,000 $25,000 $20,000 12,000 14,000 $30,000 $24,000 $18,000 2,200 DM used DL $ incurred MOH $ incurred DL hours $15,000 2,000 Estimated Data Units produced 10,000 10,000 $30,000 $25,000 $15,000 2,500 10,000 10,000 $30,000 $25,000 $15,000 2,500 Units sold DM to be used DL $ to be incurred MOH $ to be incurred DL hours Nazza Company has computed the COGS for both Year 1 and Year 2 using actual overhead costs based on actual direct labor hours. The controller is wondering about using an overhead rate based on estimated overhead costs and estimated labor hours. If overhead is applied on estimated costs and estimated labor hours for both Year 1 and Year 2, what would be the difference for Year 2 from the COGS originally computed and this newly computed COGS after any needed adjustments for over- or under-applied overhead? (Note: A "decrease" means that the newly COGS is lower than the original COGS; an "increase" means the reverse.) A. $600 decrease B. $4,800 decrease C. $4,800 increase D. $1,800 increase E. There is no difference.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:6.
Nazza Company has the following data related to the first two years of operation.
Year 1
Year 2
Actual Data
Units produced
Units sold
10,000
8,000
$25,000
$20,000
12,000
14,000
$30,000
$24,000
$18,000
2,200
DM used
DL $ incurred
MOH $ incurred
DL hours
$15,000
2,000
Estimated Data
Units produced
10,000
10,000
$30,000
$25,000
$15,000
2,500
10,000
10,000
$30,000
$25,000
$15,000
2,500
Units sold
DM to be used
DL $ to be incurred
MOH $ to be incurred
DL hours
Nazza Company has computed the COGS for both Year 1 and Year 2 using
actual overhead costs based on actual direct labor hours. The controller is
wondering about using an overhead rate based on estimated overhead costs and
estimated labor hours. If overhead is applied on estimated costs and estimated
labor hours for both Year 1 and Year 2, what would be the difference for Year 2
from the COGS originally computed and this newly computed COGS after any
needed adjustments for over- or under-applied overhead? (Note: A "decrease"
means that the newly COGS is lower than the original COGS; an "increase"
means the reverse.)
A. $600 decrease
B. $4,800 decrease
C. $4,800 increase
D. $1,800 increase
E. There is no difference.
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