Calculating the Predetermined Overhead Rate, Applying Overhead to Production, Reconciling Overhead at the End of the Year, Adjusting Cost of Goods Sold for Under- and Overapplied Overhead At the beginning of the year, Han Company estimated the following: Overhead $160,000 Direct labor hours 80,000 Han uses normal costing and applies overhead on the basis of direct labor hours. For the month of January, direct labor hours were 8,250. By the end of the year, Han showed the following actual amounts: Overhead $166,000 Direct labor hours 79,600 Assume that unadjusted Cost of Goods Sold for Han was $176,000. Required: 1. Calculate the predetermined overhead rate for Han. Round your answers to the nearest cent, if rounding is required.$ per direct labor hour 2. Calculate the overhead applied to production in January. (Note: Round to the nearest dollar, if rounding is required.)$ 3. Calculate the total applied overhead for the year.$ Was overhead over- or underapplied? By how much? overhead $ 4. Calculate adjusted Cost of Goods Sold after adjusting for the overhead variance.$
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Calculating the Predetermined
Overhead Rate, Applying Overhead to Production, Reconciling Overhead at the End of the Year, Adjusting Cost of Goods Sold for Under- and Overapplied OverheadAt the beginning of the year, Han Company estimated the following:
Overhead $160,000 Direct labor hours 80,000 Han uses normal costing and applies overhead on the basis of direct labor hours. For the month of January, direct labor hours were 8,250. By the end of the year, Han showed the following actual amounts:
Overhead $166,000 Direct labor hours 79,600 Assume that unadjusted Cost of Goods Sold for Han was $176,000.
Required:
1. Calculate the predetermined overhead rate for Han. Round your answers to the nearest cent, if rounding is required.
$ per direct labor hour2. Calculate the overhead applied to production in January. (Note: Round to the nearest dollar, if rounding is required.)
$3. Calculate the total applied overhead for the year.
$Was overhead over- or underapplied? By how much?
overhead $4. Calculate adjusted Cost of Goods Sold after adjusting for the overhead variance.
$
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