Markham Corporation uses a job-order costing system the following data are for last year

Purves Corporation is using a predetermined overhead rate that was based on estimated

total fixed manufacturing overhead of $121,000 and 10,000 direct labor-hours for the

period. The company incurred actual total fixed manufacturing overhead of $113,000 and

10,900 total direct labor-hours during the period. The predetermined overhead rate is

closest to:

$11.10

$12.10

$10.37

$11.30

Housholder Corporation uses a predetermined overhead rate base on machine-hours that it

recalculates at the beginning of each year. The company has provided the following data for

the most recent year.

Estimated total fixed manufacturing overhead from the beginning of

the year $310,000

Estimated activity level from the beginning of the year20,000 machine-

hours

Actual total fixed manufacturing overhead$338,000

Actual activity level18,300 machine-

hours

The predetermined overhead rate is closest to:

$16.90

$18.47

$16.94

$15.50

Laflame Corporation uses a job-order costing system with a single plantwide predetermined

overhead rate based on machine-hours. The company based its predetermined overhead

rate for the current year on the following data:

Total machine-hours70,000

Total fixed manufacturing overhead cost$357,000

Variable manufacturing overhead per machine-hour$3.90

The estimated total manufacturing overhead is closest to:

$273,000

$630,000

$357,000

$357,004

The following data have been recorded for recently completed Job 450 on its job cost sheet.

Direct materials cost was $3,044. A total of 46 direct labor-hours and 104 machine-hours

were worked on the job. The direct labor wage rate is $15 per labor-hour. The Corporation

applies manufacturing overhead on the basis of machine-hours. The predetermined

47.Washtenaw Corporation uses a job-order costing system. The following data are for lastyear:Estimated direct labor-hours............................................12,000Estimated manufacturing overhead costs........................$39,000Actual direct labor-hours.................................................11,000Actual manufacturing overhead costs..............................$37,000Washtenaw applies overhead using a predetermined rate based on direct labor-hours. Whatamount of overhead was applied to work in process last year?A)$39,050B)$42,600C)$35,750D)$36,960Ans: CAACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: Reporting

LO: 3,5Level: MediumSolution:Predetermined overhead rate = $39,000 ÷ 12,000 direct labor-hours= $3.25 per direct labor-hourApplied manufacturingoverhead=Actual directlabor-hours×Predeterminedoverhead rateApplied manufacturingoverhead=11,000×$3.25Applied manufacturing overhead = $35,750

三48.The Silver Company uses a predetermined overhead rate to apply manufacturing overheadto jobs. The predetermined overhead rate is based on labor cost in Dept. A and on machine-hours in Dept. B. At the beginning of the year, the company made the following estimates:Direct labor cost.............................$60,000$40,000Manufacturing overhead................$90,000$45,000Direct labor-hours..........................6,0009,000Machine-hours...............................2,00015,000What predetermined overhead rates would be used in Dept A and Dept B, respectively?AACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: ReportingLO: 3Level: Easy

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Solution:Department A:Predeterminedoverhead rate=Estimated total manufacturing overhead costEstimated total amount of the allocation base=$90,000= 150% of direct labor cost$60,000Department B:Predeterminedoverhead rate=Estimated total manufacturing overhead cost

Estimated total amount of the allocation base=$45,000= $3.00 per machine-hour15,000

三49.Reamer Company uses a predetermined overhead rate based on machine-hours to applymanufacturing overhead to jobs. The company has provided the following estimated costsfor next year:Direct materials..........................................$1,000Direct labor................................................$3,000Sales commissions.....................................$4,000Salary of production supervisor.................$2,000Indirect materials.......................................$400Advertising expense...................................$800Rent on factory equipment.........................$1,000Reamer estimates that 500 direct labor-hours and 1,000 machine-hours will be workedduring the year. The predetermined overhead rate per hour will be:AACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: Reporting

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LO: 3Level: MediumSolution:Manufacturing overhead:Salary of production supervisor.............$2,000Indirect materials....................................400Rent on factory equipment.....................1,000Total estimated manufacturing overhead.......$3,400Predeterminedoverhead rate=Total estimated manufacturing overheadEstimated machine-hours

Predeterminedoverhead rate=$3,400=$3.40 per machine-hour1,000

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