Arensky Company uses normal costing to account for overhead in its job costing system. There are 2 departments in the company: Designing and Machining. The Designing Dept is labor intensive; the Machining Dept. is machine intensive. (OH = Overhead; DLH = Direct Labor Hours; MH = Machining Hours.) The budget for 2019 is as follows: Actual results are as follows: a. Est. OH Est. DLH Est. MH b. C. Actual OH Actual DLH Actual MH Designing $2,000,000 40,000 hours 20,000 hours Designing $2,100,000 41,500 hours 19,800 hours Machining $5,600,000 10,000 hours 70,000 hours Machining $5,650,000 11,000 hours 72,000 hours Using the most logical allocation base, calculate the OH Allocation Rate for eac department. Be sure to state your final answer in proper units. For each department, calculate how much OH is allocated. For each department, give the journal entry to record over- or under-allocated overhead.
Arensky Company uses normal costing to account for overhead in its job costing system. There are 2 departments in the company: Designing and Machining. The Designing Dept is labor intensive; the Machining Dept. is machine intensive. (OH = Overhead; DLH = Direct Labor Hours; MH = Machining Hours.) The budget for 2019 is as follows: Actual results are as follows: a. Est. OH Est. DLH Est. MH b. C. Actual OH Actual DLH Actual MH Designing $2,000,000 40,000 hours 20,000 hours Designing $2,100,000 41,500 hours 19,800 hours Machining $5,600,000 10,000 hours 70,000 hours Machining $5,650,000 11,000 hours 72,000 hours Using the most logical allocation base, calculate the OH Allocation Rate for eac department. Be sure to state your final answer in proper units. For each department, calculate how much OH is allocated. For each department, give the journal entry to record over- or under-allocated overhead.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Overhead refers to the indirect expenses that the company incurs in the process of manufacturing a product. It includes the cost of inspection, electricity, designing, and machining.
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