Exercise 3-4 (Algo) Underapplied and Overapplied Overhead [LO3-4]Osborn Manufacturing uses a predetermined overhead rate of $19.70 per direct labor-hour. This predetermined rate was based on acost formula that estimates $265,950 of total manufacturing overhead for an estimated activity level of 13,500 direct labor-hours.The company actually incurred $260,000 of manufacturing overhead and 13,000 direct labor-hours during the period.Required:1. Calculate the underapplied or overapplied manufacturing overhead.2. Assume the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the closing journal entryincrease or decrease gross margin? By how much?1. Manufacturing overhead2. The gross margin wouldunderapplieddecreaseby $ 3,900by The following an applies to the questions displayed below.jBunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company's inventory balances wereas follows:Raw materialsWork in processFinished goods$ 84,500$ 35,000$ 44,100The company applies overhead cost to jobs using direct labor-hours. For this year, the company's predeterminedoverhead rate of $12.50 per direct labor-hour was based on a cost formula that estimated $500,000 of totalmanufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions wererecorded this year:a. Raw materials were purchased on account, $614,000.b. Raw materials used in production, $567,600. All of of the raw materials were used as direct materials.c. The following costs were accrued for employee services: direct labor, $450,000; indirect labor, $150,000; selling andadministrative salaries, $290,000.d. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goodswarehousing), $375,000.e. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $350,000.f. Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on alljobs during the year.g. Jobs costing $1,461,900 to manufacture according to their job cost sheets were completed during the year.h. Jobs were sold on account to customers during the year for a total of $3,172,500. The jobs cost $1,471,900 tomanufacture according to their job cost sheets.Foundational 3-15 (Algo)15. What is the net operating income for this year?

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Exercise 3-4 (Algo) Underapplied and Overapplied Overhead [LO3-4] Osborn Manufacturing uses a predetermined overhead rate of $19.70 per direct labor-hour. This predetermined rate was based on a ost formula that estimates $265,950 of total manufacturing overhead for an estimated activity level of 13,500 direct labor-hours. he company actually incurred $260,000 of manufacturing overhead and 13,000 direct labor-hours during the period. equired: Calculate the underapplied or overapplied manufacturing overhead. Assume the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the closing journal entry increase or decrease gross margin? By how much? Manufacturing overhead The gross margin would underapplied decrease by $ 3,900 by

Exercise 3-4 (Algo) Underapplied and Overapplied Overhead [LO3-4] Osborn Manufacturing uses a predetermined overhead rate of $19.70 per direct labor-hour. This predetermined rate was based on a ost formula that estimates $265,950 of total manufacturing overhead for an estimated activity level of 13,500 direct labor-hours. he company actually incurred $260,000 of manufacturing overhead and 13,000 direct labor-hours during the period. equired: Calculate the underapplied or overapplied manufacturing overhead. Assume the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the closing journal entry increase or decrease gross margin? By how much? Manufacturing overhead The gross margin would underapplied decrease by $ 3,900 by

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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Makkah Equipment Co. sells machines and has the following information for the year. Actual Estimated Overhead cost OMR 2,400,000 OMR 3,000,000 Direct labor hours 120,000 300,000 Machine hours 300,000 150,000 Overhead is applied on the basis of machine hours. The amount of over or under-applied overhead is: Select one: O a. 300N00 Overapplied b. None of the answers are correct O c. 300,000 Underapplied d. 260,000 Underapplied e. 150,000 Underapplied
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2-2 i k nces - Saved Manufacturing overhead applied Luthan Company uses a plantwide predetermined overhead rate of $22.90 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $274,800 of total manufacturing overhead cost for an estimated activity level of 12,000 direct labor-hours. Check my work Q Search lipi Si TE Find Solu Texti Q
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Cost & Management Accounting AC336 Question 3 (13 Marks) Krypton Inc. manufactures two products, Vintex and Bromal. The company estimated it would incur $160,690 in manufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labour hours. Data concerning the current period's operations appear below: Estimated Volume Direct labour hours per unit Direct labour cost per unit Direct material cost per unit Activity cost pool Material acquisition costs Machine costs General factory costs Required: Activity cost pool Material acquisition costs Machine costs General factory costs Vintex 4,700 units 2.1 hours Estimated overhead costs $33.60 $4.80 The company is considering using an activity-based costing system to compute unit product costs instead of its traditional single plant-wide system based on direct labour hours. The activity- based costing system would use three activity cost pools and drivers: Driver Purchase orders…
3. Application of Overhead Costs 3A) CMA Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. Estimated and actual data for direct labor and manufacturing overhead last year are as follows: Manufacturing overhead Direct labor hours Estimated P 720,000 600,000 What was the manufacturing overhead for CMA Company for last year? a. Over-applied by P 20,000 c. Over-applied by P 40,000 d. Under-applied by P 40,000 b. Under-applied by P 20,000 Activity 1 Activity 2 Activity 3 3B) CIA Company uses activity-based costing to compute product costs for external reports. The company has three activity centers and applies overhead using predetermined overhead rates for each activity center. Estimated costs and activities for the current year are presented below: Estimated Overhead Cost Expected Activity P 18,000 P 57,600 P 97,200 Actual costs and activities for the current year were as follows: Activity 1 Activity 2 Activity 3 Actual P…
O e. $2,636 Company XYZ uses machine hours to allocate its manufacturing overhead. The company estimates that total machine hours to be operated next year are 190,000 hours. The estimated variable overhead is $9 per hour and the estimated fixed overhead costs are $152,000. Calculate the predetermined overhead rate. Select one: O a. $10.80 O b. $9.80 O c. $0.10 O d. $0.80 O e. None of the answers given Finish attempt . ge OADUa Prisc F9 F6 F7 F3 F4 F2 23 24 8 6 3
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A company uses direct labor costs to apply overhead. Its production costs for the period are: direct materials, $45,000; direct labor, $35,000; and overhead applied, $38,500. What is its predetermined overhead rate?