In 2020 the budget for a machine shop showed overheads of $60,000 and volume of activity of 12,000 machine hours. In January of 2020, the machine shop incurred $5,400 of overhead and 1,050 machine hours were worked. Required: a. Determine: i. The predetermined absorption rate. ii. The under/over absorption rate. b. With the use of calculation, explain the factors that contributed to the under/over absorption of overheads.
In 2020 the budget for a machine shop showed overheads of $60,000 and volume of activity of 12,000 machine hours. In January of 2020, the machine shop incurred $5,400 of overhead and 1,050 machine hours were worked. Required: a. Determine: i. The predetermined absorption rate. ii. The under/over absorption rate. b. With the use of calculation, explain the factors that contributed to the under/over absorption of overheads.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
In 2020 the budget for a machine shop showed
12,000 machine hours.
In January of 2020, the machine shop incurred $5,400 of overhead and 1,050 machine hours
were worked.
Required:
a. Determine:
i. The predetermined absorption rate.
ii. The under/over absorption rate.
b. With the use of calculation, explain the factors that contributed to the under/over absorption
of overheads.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education