As an assistant cost accountant for Mississippi Industries, you have been assigned to re- view the activity base for the predetermined factory overhead rate. The president, Tony Favre, has expressed concern that the over- or underapplied overhead has fluctuated excessively over the years. An analysis of the company's operations and use of the current overhead rate (direct labor cost) has narrowed the possible alternative overhead bases to direct labor cost and machine hours. For the past five years, the following data have been gathered: 2014 2013 2012 2011 2010 $ 790,000 777,000 $ 13,000 $ 870,000 $ 935,000 $ 760,000 777,000 $ (17,000) Actual overhead $ 845,000 Applied overhead (Over-) underapplied overhead 882,000 924,000 840,000 $ (12,000) $ 11,000 24 5,000 Direct labor cost $3,885,000 $4,410,000 $4,620,000 $4,200,000 $3,885,000 Machine hours 93,000 104,000 111,000 100,400 91,600

As an assistant cost accountant for Mississippi Industries, you have been assigned to re- view the activity base for the predetermined factory overhead rate. The president, Tony Favre, has expressed concern that the over- or underapplied overhead has fluctuated excessively over the years. An analysis of the company's operations and use of the current overhead rate (direct labor cost) has narrowed the possible alternative overhead bases to direct labor cost and machine hours. For the past five years, the following data have been gathered: 2014 2013 2012 2011 2010 $ 790,000 777,000 $ 13,000 $ 870,000 $ 935,000 $ 760,000 777,000 $ (17,000) Actual overhead $ 845,000 Applied overhead (Over-) underapplied overhead 882,000 924,000 840,000 $ (12,000) $ 11,000 24 5,000 Direct labor cost $3,885,000 $4,410,000 $4,620,000 $4,200,000 $3,885,000 Machine hours 93,000 104,000 111,000 100,400 91,600

Name: As an assistant cost accountant for Mississippi Industries, you have
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Description: As an assistant cost accountant for Mississippi Industries, you have been assigned to re-view the activity base for the predetermined factory overhead rate. The president, TonyFavre, has expressed concern that the over- or underapplied overhead has

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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