Concept explainers
Predetermined overhead allocation:
Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product.
Requirement-a:
To Calculate: Amount of applied overhead
Predetermined overhead allocation:
Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product. Manufacturing costs include indirect material indirect labor and overheads. These costs are allocated to the products using the predetermined overhead allocation rate. The formula of predetermined overhead allocation rate is as follows:
Requirement-b:
To Calculate: The cost of each coffee mug
Predetermined overhead allocation:
Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product. Manufacturing costs include indirect material indirect labor and overheads. These costs are allocated to the products using the predetermined overhead allocation rate. The formula of predetermined overhead allocation rate is as follows:
Requirement-c:
To Calculate: The cost of mugs sold and cost of mug's inventory
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