Koebel Corp uses a job order costing system with manufacturing overhead applied to products on the basis of direct labor hours. For the upcoming year, Koebel Corp estimated total manufacturing overhead cost at $500,000 and total direct labor hours of 50,000. Koebel Corp started the year with no beginning balances in either Work in Process Inventory or Finished Goods Inventory. During the year actual manufacturing overhead incurred was $512,500 and 49,000 direct labor hours were used. i. Calculate the predetermined overhead rate. ii. Calculate how much manufacturing overhead will be applied to production. ili. Is overhead over- or underapplied? By how much? iv. What account should be adjusted for over- or underapplied overhead? Should the balance be increased or decreased?
Koebel Corp uses a job order costing system with manufacturing overhead applied to products on the basis of direct labor hours. For the upcoming year, Koebel Corp estimated total manufacturing overhead cost at $500,000 and total direct labor hours of 50,000. Koebel Corp started the year with no beginning balances in either Work in Process Inventory or Finished Goods Inventory. During the year actual manufacturing overhead incurred was $512,500 and 49,000 direct labor hours were used. i. Calculate the predetermined overhead rate. ii. Calculate how much manufacturing overhead will be applied to production. ili. Is overhead over- or underapplied? By how much? iv. What account should be adjusted for over- or underapplied overhead? Should the balance be increased or decreased?
Chapter1: Financial Statements And Business Decisions
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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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Transcribed Image Text:Koebel Corp uses a job order costing system with manufacturing overhead applied to products on
the basis of direct labor hours. For the upcoming year, Koebel Corp estimated total manufacturing
overhead cost at $500,000 and total direct labor hours of 50,000. Koebel Corp started the year
with no beginning balances in either Work in Process Inventory or Finished Goods Inventory.
During the year actual manufacturing overhead incurred was $512,500 and 49,000 direct labor
hours were used.
i. Calculate the predetermined overhead rate.
ii. Calculate how much manufacturing overhead will be applied to production.
iii. Is overhead over- or underapplied? By how much?
iv. What account should be adjusted for over- or underapplied overhead? Should the balance be
increased or decreased?
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