1. Predetermined Overhead Rate, Overhead Application
At the beginning of the year, Ilberg Company estimated the following costs:
|
Overhead
|
$450,000
|
|
Direct labor cost
|
600,000
|
Ilberg Company uses normal costing and applies overhead on the basis of direct labor cost. (Direct labor cost is equal to total direct labor hours worked multiplied by the wage rate.) For the month of December, direct labor cost was $39,900.
Required:
1. Calculate the predetermined overhead rate for the year. Enter the percentage answer as a whole number.
2. Calculate the overhead applied to production in December.
2. Overhead Variance (Over- or Underapplied), Closing to Cost of Goods Sold
At the end of the year, Ilberg Company provided the following actual information:
|
Overhead
|
$456,500
|
|
Direct labor cost
|
607,200
|
Ilberg uses normal costing and applies overhead at the rate of 75% of direct labor cost. At the end of the year, Cost of Goods Sold (before adjusting for any overhead variance) was $851,000.
Required:
1. Calculate the overhead variance for the year.
2. Dispose of the overhead variance by adjusting Cost of Goods Sold.
3. Predetermined Departmental Overhead Rates, Applying Overhead to Production
At the beginning of the year, Hallett Company estimated the following:
|
|
Cutting Department
|
Sewing Department
|
Total
|
|
Overhead
|
$240,000
|
$350,000
|
$590,000
|
|
Direct labor hours
|
31,200
|
101,000
|
132,200
|
|
Machine hours
|
150,000
|
-
|
150,000
|
Hallett uses departmental overhead rates. In the cutting department, overhead is applied on the basis of machine hours. In the sewing department, overhead is applied on the basis of direct labor hours. Actual data for the month of June are as follows:
|
|
Cutting Department
|
Sewing Department
|
Total
|
|
Overhead
|
$20,610
|
$35,750
|
$56,360
|
|
Direct labor hours
|
2,800
|
8,600
|
11,400
|
|
Machine hours
|
13,640
|
-
|
13,640
|
Required:
1. Calculate the predetermined overhead rates for the cutting and sewing departments. Round your answers to the nearest cent.
2. Calculate the overhead applied to production in each department for the month of June. Use overhead application rates that are rounded to the nearest cent in your calculations, and round your final answers to the nearest dollar.
3. By how much has each department's overhead been overapplied or underapplied?
3. Convert Departmental Data to Plantwide Data, Plantwide Overhead Rate, Apply Overhead to Production
At the beginning of the year, Hallett Company estimated the following:
|
|
Cutting Department
|
Sewing Department
|
Total
|
|
Overhead
|
$239,000
|
$350,000
|
$589,000
|
|
Direct labor hours
|
31,200
|
100,000
|
131,200
|
|
Machine hours
|
150,000
|
-
|
150,000
|
Assume that Hallett has decided to use a plantwide overhead rate based on direct labor hours. Actual data for the month of June are as follows:
|
|
Cutting Department
|
Sewing Department
|
Total
|
|
Overhead
|
$20,610
|
$35,750
|
$56,360
|
|
Direct labor hours
|
2,800
|
8,600
|
11,400
|
|
Machine hours
|
13,640
|
-
|
13,640
|
Required:
1. Calculate the predetermined plantwide overhead rate. Round your answer to the nearest cent.
2. Calculate the overhead applied to production for the month of June. Use an overhead application rate that is rounded to the nearest cent in your calculations, and round your final answer to the nearest dollar.
3. Calculate the overhead variance for the month of June.
4. At the beginning of June, Rhone Company had two jobs in process, Job 44 and Job 45, with the following accumulated cost information:
|
Job 44
|
Job 45
|
|
Direct materials
|
$5,300
|
$1,300
|
|
Direct labor
|
1,400
|
3,100
|
|
Applied overhead
|
980
|
2,170
|
|
Balance, June 1
|
$7,680
|
$6,570
|
During June, two more jobs (46 and 47) were started. The following direct materials and direct labor costs were added to the four jobs during the month of June:
|
Job 44
|
Job 45
|
Job 46
|
Job 47
|
|
Direct materials
|
$2,400
|
$7,160
|
$1,850
|
$1,750
|
|
Direct labor
|
740
|
6,420
|
1,000
|
520
|
At the end of June, Jobs 44, 45, and 47 were completed. Only Job 45 was sold. On June 1, the balance in Finished Goods was zero.
Required:
1. Calculate the overhead rate based on direct labor cost. Round to three decimal places.
2. Prepare a brief job-order cost sheet for the four jobs. Show the balance as of June 1 as well as direct materials and direct labor added in June. Apply overhead to the four jobs for the month of June, and show the ending balances.
3. Calculate the ending balances of Work in Process and Finished Goods as of June 30.
4. Calculate the Cost of Goods Sold for June.
5. Assigning Support Department Costs by Using The Direct Method
Quillen Company manufactures a product in a factory that has two producing departments, Cutting and Sewing, and two support departments, S1 and S2. The activity driver for S1 is number of employees, and the activity driver for S2 is number of maintenance hours. The following data pertain to Quillen:
|
|
Support Departments
|
|
Producing Departments
|
|
|
S1
|
S2
|
|
Cutting
|
Sewing
|
|
Direct costs
|
$180,000
|
$150,000
|
|
$122,000
|
$90,500
|
|
Normal activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of employees
|
-
|
30
|
|
63
|
147
|
|
Maintenance hours
|
1,200
|
-
|
|
16,000
|
4,000
|
Required:
1. Calculate the cost assignment ratios to be used under the direct method for Departments S1 and S2. (Note: Each support department will have two ratios-one for Cutting and the other for Sewing.) Enter your answers as decimal values.
2. Allocate the support department costs to the producing departments by using the direct method. Use a minus sign to indicate a subtraction. For those boxes in which no entry is required, leave the box blank or enter zero ("0").