The following data relates to Bermuda Company for the year 20X6: Estimated Manufacturing Overhead Costs $240,000 Estimated direct labour cost Estimated Direct Labour Hours $300,000 30,000 Actual Manufacturing Overhead Costs $289,000 $315,000 33,000 Direct Labour Hours Actual direct labour cost Actual direct labour hours Allocation Base

The following data relates to Bermuda Company for the year 20X6: Estimated Manufacturing Overhead Costs $240,000 Estimated direct labour cost Estimated Direct Labour Hours $300,000 30,000 Actual Manufacturing Overhead Costs $289,000 $315,000 33,000 Direct Labour Hours Actual direct labour cost Actual direct labour hours Allocation Base

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Manufacturing overhead allocated for 20X6 is:

Select one:

$252,000

$220,500

$450,450

$264,000

The following data relates to Bermuda Company for the year 20X6:
Estimated Manufacturing Overhead Costs $240,000
Estimated direct labour cost
Estimated Direct Labour Hours
Actual Manufacturing Overhead Costs
Actual direct labour cost
Actual direct labour hours
$300,000
30,000
$289,000
$315,000
33,000
Allocation Base
Direct Labour Hours

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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