Whitebeard Ltd produces two types of polearms: Naginata and Halberd. Assume there are only two production departments involved in the manufacturing process. Production of these two models start in the forging department and ends in the assembly department. The budgeted figures for the year are as follows: Forging Assembly Budgeted overhead 300,000 420,000 Budgeted direct labour hours 40,000 80,000 Budgeted machine hours 75,000 19,000 Actual total overhead costs for the year were $740,000 and the following relates to the year ended: Naginata Halberd Units produced 25,000 30,000 Prime costs 240,000 176,000 Direct labour hours used: Forging 14,000 18,000 Assembly 38,000 42,000 Machine hours used: Forging 36,000 42,000 Assembly 5,000 6,000 Required: Based on the plantwide overhead rate, calculate: the predetermined overhead rate based on direct labour hours. the unit product cost of a Naginata and Halberd. Based on the departmental overhead rates, assuming that machine hours is the allocation based used for the forging department and direct labour hours is the allocation based used for the assembly department, calculate: the predetermined overhead rates for the production departments. the unit product cost of a Naginata and Halberd. Estimate the amount of underapplied or overapplied overhead using: the plantwide overhead rate in (a) the departmental overhead rates in (b)

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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Whitebeard Ltd produces two types of polearms: Naginata and Halberd. Assume there are only two production departments involved in the manufacturing process. Production of these two models start in the forging department and ends in the assembly department. The budgeted figures for the year are as follows:

	Forging	Assembly
Budgeted overhead	300,000	420,000
Budgeted direct labour hours	40,000	80,000
Budgeted machine hours	75,000	19,000

Actual total overhead costs for the year were $740,000 and the following relates to the year ended:

	Naginata	Halberd
Units produced	25,000	30,000
Prime costs	240,000	176,000
Direct labour hours used:
Forging	14,000	18,000
Assembly	38,000	42,000
Machine hours used:
Forging	36,000	42,000
Assembly	5,000	6,000

Required:

Based on the plantwide overhead rate, calculate:
1. the predetermined overhead rate based on direct labour hours.
2. the unit product cost of a Naginata and Halberd.
Based on the departmental overhead rates, assuming that machine hours is the allocation based used for the forging department and direct labour hours is the allocation based used for the assembly department, calculate:
1. the predetermined overhead rates for the production departments.
2. the unit product cost of a Naginata and Halberd.
Estimate the amount of underapplied or overapplied overhead using:
1. the plantwide overhead rate in (a)
2. the departmental overhead rates in (b)

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