Stargazer Company logged 7,250 machine hours for the month of June. P42,500 was spent for manufacturing overhead and this overhead is allocated on the basis of machine hours. The company operates 5 departments; however, one department was closed for the month of June due to poor market conditions for its product. It was decided that this department (#3) should be allocated a lump sum of P5,000 as its share of June overhead. 24. If this policy is followed, how much overhead would be charged to Department 2, which used 1,750 machine hours? P 1,207 b. P 9,052 а. c. P10,259 d. P20,714
Stargazer Company logged 7,250 machine hours for the month of June. P42,500 was spent for manufacturing overhead and this overhead is allocated on the basis of machine hours. The company operates 5 departments; however, one department was closed for the month of June due to poor market conditions for its product. It was decided that this department (#3) should be allocated a lump sum of P5,000 as its share of June overhead. 24. If this policy is followed, how much overhead would be charged to Department 2, which used 1,750 machine hours? P 1,207 b. P 9,052 а. c. P10,259 d. P20,714
Stargazer Company logged 7,250 machine hours for the month of June. P42,500 was spent for manufacturing overhead and this overhead is allocated on the basis of machine hours. The company operates 5 departments; however, one department was closed for the month of June due to poor market conditions for its product. It was decided that this department (#3) should be allocated a lump sum of P5,000 as its share of June overhead. 24. If this policy is followed, how much overhead would be charged to Department 2, which used 1,750 machine hours? P 1,207 b. P 9,052 а. c. P10,259 d. P20,714
THIS is cOST ACCOUNTING FOR FACTORY OVERHEAD. PLEASE ANSWER AND SHOW SOLUTIONS
Transcribed Image Text:Consolidated Magnets, Inc. has 3 plants. Each plant produces identical magnets but
uses different manufacturing processes. Each plant sells to different customers,
setting its prices. Headquarters' costs total P350,000. Factors that are considered for
allocation purposes are as follows:
Unit Volume
15,000
19,000
17,500
51,500
Peso Volume
500,000 P
900,000
750,000
P 2,150,000 P1,700,000
Assets
300,000
600,000
800,000
Рayroll
P 335,000
Plant A
Plant B
450,000
280,000
PL065.000
Plant C
Totals
25. What is the amount of headqyarters` costs allocated to Plant A if payroll is used
as the allocation base?
а.
75,053
b. Р
92,019
с. Р 10,094
d. P1,019,357
26. What is the amount of headquarters' costs allocated to Plant B if sales volume, in
pesos, is used as the allocated base?
a. P 81,395
b. P 129,126
с. Р 146,512
d. P 268,605
Transcribed Image Text:Stargazer Company logged 7,250 machine hours for the month of June. P42,500 was
spent for manufacturing overhead and this overhead is allocated on the basis of
machine hours. The company operates 5 departments; however, one department was
closed for the month of June due to poor market conditions for its product. It was
decided that this department (#3) should be allocated a lump sum of P5,000 as
its share of June overhead.
24. If this policy is followed, how much overhead would be charged to Department
2, which used 1,750 machine hours?
а. Р 1,207
b. Р 9,052
с.
P10,259
d. P20,714
Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.
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