XYZ company uses a predetermined overhead rate to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. X and on machine-hours in Dept. Y. At the beginning of the year, the Corporation made the following estimates: Dept. X Dept. Y Direct labor cost OMR 40,000 OMR 60,000 Manufacturing overhead OMR 60,000 OMR 100,000 Direct labor-hours 6,000 9,000 Machine-hours 15,000 20,000 What predetermined overhead rates would be used in Dept. X and Dept. Y, respectively?

XYZ company uses a predetermined overhead rate to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. X and on machine-hours in Dept. Y. At the beginning of the year, the Corporation made the following estimates: Dept. X Dept. Y Direct labor cost OMR 40,000 OMR 60,000 Manufacturing overhead OMR 60,000 OMR 100,000 Direct labor-hours 6,000 9,000 Machine-hours 15,000 20,000 What predetermined overhead rates would be used in Dept. X and Dept. Y, respectively?

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Description: XYZ company uses a predetermined overhead rate to apply manufacturing overhead to jobs. The predetermined overhead rate isbased on labor cost in Dept. X and on machine-hours in Dept. Y. At the beginning of the year, the Corporation made the followin

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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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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Question

XYZ company uses a predetermined overhead rate to apply manufacturing overhead to jobs. The predetermined overhead rate is
based on labor cost in Dept. X and on machine-hours in Dept. Y. At the beginning of the year, the Corporation made the following
estimates:
Dept. X
Dept. Y
Direct labor cost
OMR 40,000 OMR 60,000
Manufacturing overhead
OMR 60,000 OMR 100,000
Direct labor-hours
6,000
9,000
Machine-hours
15,000
20,000
What predetermined overhead rates would be used in Dept. X and Dept. Y, respectively?
a.
150% and OMR 5.00
b. 167% and OMR 4.00
C.
167% and OMR 6.67
d. None of the given answers
e.
200% and OMR 4.00

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