Cascade Manufacturing uses a predetermined overhead rate of 175% of direct labor cost. During the month, Cascade incurred $180,000 in total factory labor costs, of which $150,000 is direct labor and $30,000 is indirect labor. The actual manufacturing overhead incurred was $255,000. (a) Compute the amount of manufacturing overhead applied during the month. (b) Determine the amount of under- or over-applied manufacturing overhead.

Cascade Manufacturing uses a predetermined overhead rate of 175% of direct labor cost. During the month, Cascade incurred $180,000 in total factory labor costs, of which $150,000 is direct labor and $30,000 is indirect labor. The actual manufacturing overhead incurred was $255,000. (a) Compute the amount of manufacturing overhead applied during the month. (b) Determine the amount of under- or over-applied manufacturing overhead.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter3: Process Cost Systems

Section: Chapter Questions

Problem 4E: The cost accountant for River Rock Beverage Co. estimated that total factory overhead cost for the...

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Queen Bees Honey, Inc., estimated its annual overhead to be $110,000 and based its predetermined overhead rate on 27,500 direct labor hours. At the end of the year, actual overhead was $106,000 and the total direct labor hours were 29,000. What is the entry to dispose of the over applied or under applied overhead?
Abbey Products Company is studying the results of applying factory overhead to production. The following data have been used: estimated factory overhead, 60,000; estimated materials costs, 50,000; estimated direct labor costs, 60,000; estimated direct labor hours, 10,000; estimated machine hours, 20,000; work in process at the beginning of the month, none. The actual factory overhead incurred for November was 80,000, and the production statistics on November 30 are as follows: Required: 1. Compute the predetermined rate, based on the following: a. Direct labor cost b. Direct labor hours c. Machine hours 2. Using each of the methods, compute the estimated total cost of each job at the end of the month. 3. Determine the under-or overapplied factory overhead, in total, at the end of the month under each of the methods. 4. Which method would you recommend? Why?
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