MPX Resources uses absorption costing with a predetermined hourly fixed overhead absorption rate. For the yearended 31 December 2023, the following situations arose:1. Actual overheads were less than the budgeted expenditure; and2. Actual hours worked were less that the budgeted hours used to set the predetermine overhead absorption rate.Required:Which of the following statements is correct?OA. Both situations would cause the overheads to be over-absorbed.OB. Both situations would cause the overheads to be under-absorbed.OC. Situation 1 would cause the overheads to be under-absorbed and situation 2 would cause the overheads to be over-absorbed.OD. Situation 1 would cause the overheads to be over-absorbed and situation 2 would cause the overheads to be under-absorbed.

Situation 1this will cause the overhead to be over-absorbed this is because the actual overhead…

Answered: MPX Resources uses absorption costing…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 11E: Ripley, Inc., costs products using a normal costing system. The following data are available for...

See similar textbooks

Similar questions

Which one is the correct answer?
Which of the following statements is true regarding a predetermined overhead rate based on capacity? Multiple Choice It is usually lower than a predetermined overhead rate based on budgeted output for the coming period. It is usually higher than a predetermined overhead rate based on budgeted output for the coming period. It will usually be the same as a predetermined overhead rate based on budgeted output for the coming period. It is most often used for external financial reporting purposes.
If the predetermined overhead rate is based on the estimated level of activity for the current period, then products will be charged only for the capacity that they use and will not be charged for the capacity they don't use. True or False True False
Which of the following statements is incorrect? O A. If MOH is overallocated to a job that has been sold, and the company calculates sales price by marking up job costs, the job will likely be underpriced. O B. The formula to arrive at the POHR is total budgeted manufacturing overhead divided by total estimated allocation base. O C. To calculate the increase to WIP for allocated MOH costs, the POHR is multiplied by the actual amount of the allocation based used by the cost object. D. "Number of units" is typically not an appropriate allocation base for MOH because the company's products do not consume equal overhead resources. If the over/underallocated MOH is fairly large and the majority of the units have not been sold, the balance in MOH should be prorated between WIP, FG, and COGS. O E.
Discuss two advantages and two disadvantages of a standard costing system in which the standarddirect labor rates per hour are not changed during the year to reflect events such as a new laborcontract.
The computation of absorption costing gross profit always involves blow subtracting:a. all current-year fixed manufacturing overhead.b. some, but not all, current-year fixed manufacturing overhead.c. all fixed manufacturing overhead applied to units sold in the current year.d. no fixed manufacturing overhead.
Briefly explain b)
A company prepares income statements using both absorption and variable costing methods. Factory overhead cost applied per unit produced in 2020 was the same in 2019. The 2020 variable costing statement reported a profit whereas 2020 absorption costing statement reported a loss. The difference in income could be explained by units produced in 2020 being: a. Less than units sold in 2020 b. Less than the activity level used for allocating overhead to the product c. In excess of activity level used for allocating overhead to the product d. In excess of units sold in 2020
Overallocated manufacturing overhead results when Question 37 options: estimated overhead is less than actual overhead. actual overhead is less than allocated overhead. production is less than last year. actual overhead is less than expected.
Which of the following statements is true regarding cost per equivalent unit? a. this calculation only includes variable costs. b. this measure is used to assign costs to units transferred out. c. this measure always stays the same from one month to the next regardless of different levels of production. d. the formula to calculate this measure used total equivalent units accounted for divided by total costs to be accounted for. e. none of the answer choices is correct.
" When the predetermined overhead rate is based on the level of activity at capacity, an item called the Cost of Unused Capacity might appear to be treated as a period expense on income statements prepared for internal management use." Please explain the statement (True/False) thoroughly with examples. What does "Cost of Unused Capacity" mean?
please answer within the format by providing formula the detailed workingPlease provide answer in text (Without image)Please provide answer in text (Without image)Please provide answer in text (Without image)

SEE MORE QUESTIONS

Recommended textbooks for you

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning