Osborn Manufacturing uses a predetermined overhead rate of $19.20 per direct labor-hour. This predetermined rate was based on a cost formula that estimates $249,600 of total manufacturing overhead for an estimated activity level of 13,000 direct labor-hours. The company actually incurred $247,000 of manufacturing overhead and 12,500 direct labor-hours during the period. Required: 1. Determine the amount of underapplied or overapplied manufacturing overhead for the period. 2. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the journal entry to dispose of the underapplied or overapplied overhead increase or decrease the company's gross margin? By how much? 1. Manufacturing overhead 2. The gross margin would by by

Osborn Manufacturing uses a predetermined overhead rate of $19.20 per direct labor-hour. This predetermined rate was based on a cost formula that estimates $249,600 of total manufacturing overhead for an estimated activity level of 13,000 direct labor-hours. The company actually incurred $247,000 of manufacturing overhead and 12,500 direct labor-hours during the period. Required: 1. Determine the amount of underapplied or overapplied manufacturing overhead for the period. 2. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the journal entry to dispose of the underapplied or overapplied overhead increase or decrease the company's gross margin? By how much? 1. Manufacturing overhead 2. The gross margin would by by

Name: Dog Exercise 3-4 Underapplied and Overapplied Overhead [LO3-4]Osborn M
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Description: Dog Exercise 3-4 Underapplied and Overapplied Overhead [LO3-4]Osborn Manufacturing uses a predetermined overhead rate of $19.20 per direct labor-hour. This predetermined rate was based on acost formula that estimates $249,600 of total manufacturing o

Managerial Accounting: The Cornerstone of Business Decision-Making

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ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter4: Job-order Costing And Overhead Application

Section: Chapter Questions

Problem 62P: (Appendix 4A) Overhead Application, Journal Entries, Job Cost At the beginning of the year, Smith...

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

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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Exercise 3-4 Underapplied and Overapplied Overhead [LO3-4]
Osborn Manufacturing uses a predetermined overhead rate of $19.20 per direct labor-hour. This predetermined rate was based on a
cost formula that estimates $249,600 of total manufacturing overhead for an estimated activity level of 13,000 direct labor-hours.
The company actually incurred $247,000 of manufacturing overhead and 12,500 direct labor-hours during the period.
Required:
1. Determine the amount of underapplied or overapplied manufacturing overhead for the period.
2. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the journal entry to
dispose of the underapplied or overapplied overhead increase or decrease the company's gross margin? By how much?
1. Manufacturing overhead
2. The gross margin would
by
by

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Exercise 7-32 (Algo) Prorate Over- or Underapplied Overhead (LO 7- 3) Yarra Fabrication estimates that its manufacturing overhead will be $2,316,800 in year 1. It further estimates that direct material costs will amount to $1,448,000. Actual manufacturing overhead costs for the year were $2,460,000. Actual direct materials costs were $1,610,000. Manufacturing overhead is applied to jobs based on direct materials cost using predetermined rates. The total applied overhead for the year was $2,576,000 The balance in each of the inventory accounts is as follows. Work-in-process inventory $ 484,000 Finished goods inventory $ 1,144,000 Cost of goods sold $ 7,172,000 Required: Prepare an entry to allocate the over- or underapplied overhead. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Problem 7-47 (Algo) Estimate Machine-Hours Worked from Overhead Data (LO 7-3) Melbourne Company estimated that machine-hours for the year would be 39,100 hours and overhead (all fixed) would be $144,670. Melbourne applies its overhead on the basis of machine-hours. During the year, all overhead costs were exactly as planned ($144,670). There was $22,200 in overapplied overhead. Required: How many machine-hours were worked during the period? (Do not round intermediate calculations.)
ces Exercise 2-1 (Algo) Compute a Predetermined Overhead Rate [LO2-1] Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 39,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $511,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. Harris's actual manufacturing overhead cost for the year was $661,726 and its actual total direct labor was 39,500 hours. Required: Compute the company's plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.) Predetermined overhead rate per DLH
im.3
Exercise 11-4A (Algo) Calculating applied overhead LO 11-2 Stuart, Inc. estimates manufacturing overhead costs for the Year 3 accounting period as follows. Equipment depreciation $ 191,000 Supplies 20,000 Materials handling 33,400 Property taxes 14,800 Production setup 19,800 Rent 45,000 Maintenance 39,300 Supervisory salaries 315,100 The company uses a predetermined overhead rate based on machine hours. Estimated hours for labor in Year 3 were 215,000 and for machines were 128,000.Required Calculate the predetermined overhead rate. (Round your answer to 2 decimal places.) Determine the amount of manufacturing overhead applied to Work in Process Inventory during the Year 3 period if actual machine hours were 143,000. (Do not round intermediate calculations.)
201 Exercise 7-35 (Static) Prorate Over- or Underapplied Overhead (LO 7-3) Linzee Liners estimates that its manufacturing overhead will be $1,725,000 in Year 1. It further estimates that direct labor costs will amount to $750,000. During March, Linzee worked on four jobs with actual direct labor costs of $35,000 for Job 0301, $22,500 for Job 0302, $32,000 for Job 0303, and $16,000 for Job 0304. Actual manufacturing overhead costs for the year were $1,710,000. Actual direct labor costs for the year were $735,000. Manufacturing overhead is applied to jobs based on direct labor costs using predetermined rates. The amount of overhead applied in each of the inventory accounts at the end of Year 1 is as follows: Work-in-process inventory Finished goods inventory. Cost of goods sold Required: Prepare an entry to allocate the over- or underapplied overhead. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. No A $ 33,810 $…
Problem 7-50 (Algo) Estimate Direct Labor Costs from Overhead Data (LO 7-2) Kenmore Fabrication estimated that direct labor cost for the year would be $648,800. The company also estimated that fixed overhead would be $486,600 and variable overhead would be 35 percent of direct labor cost. Kenmore applies its overhead on the basis of direct labor cost. During the year, all fixed overhead costs were exactly as planned ($486,600) and variable overhead was also incurred as expected. There was $31,650 in underapplied overhead. Required: How much did Kenmore spend on direct labor cost during the period? Actual direct labor cost
Exercise 7-40 (Algo) Calculating Expected Activity Using the Predetermined Overhead Rate (LO 7-3) Auduon, Incorporated uses a predetermined factory overhead rate based on machine-hours. For October, Audubon recorded $5.300 In overapplied overhead, based on 34.900 actual machine-hours worked and actual manufacturing overhead incurred of $599,517 Audubon estimated manufacturing overhead for October to be $568,424. Required: What was the estimated number of machine-hours Audubon expected in October? Note: Do not round intermediate calculations. Expected machine-hours machine-hours
Nova Company's total overhead cost at various levels of activity are presented below Total Overhead Machine- Month Hours Cost April May June 52,000 42,000 62,000 72,000 $203,860 $181,060 $226,660 $249,460 July Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 42,000 machine-hour level of activity is: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost S 50,400 67,000 63.660 181,060 Nova Company's management wants to break down the maintenance cost into its variable and fixed cost elements Required: 1. Estimate how much of the $249,460 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $249,460 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!) (Do not round intermediate calculations.) Maintenance cost in July 2. Using the high-low method,…
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