Requirements: 1. Compute Young’s predetermined manufacturing overhead rate. 2. How much manufacturing overhead was allocated to…
The following solution is suggested to handle the subject “Requirements: 1. Compute Young’s predetermined manufacturing overhead rate. 2. How much manufacturing overhead was allocated to…“. Let’s keep an eye on the content below!
Question “Requirements: 1. Compute Young’s predetermined manufacturing overhead rate. 2. How much manufacturing overhead was allocated to…”
Requirements:
1. | Compute Young’s predetermined manufacturing overhead rate. |
2. | How much manufacturing overhead was allocated to jobs during |
3. | How much manufacturing overhead was incurred during the year? |
4. | Were the jobs overcosted or undercosted? By how much? |
Answer
Manufacturing overhead estimated at $560,000
Machine hour = 80,000
Predetermined overhead rate = Estimated manufacturing overhead/Estimated hour
= 560,000/80,000
$7 an hour
Manufacturing overhead assigned to the Job = Actual machine hours x Predetermined overhead rate
= 53,500 x 7.
= $374,500
Actual manufacturing overhead = Equipment + Property taxes on plants + Wages of janitors
= 475,000 + 22,000 + 10,500
= $507,500
Manufacturing overhead allocated to the Job is lower than actual manufacturing overhead. Therefore, manufacturing overhead is under-allocated at the end.
Sub-allocated manufacturing overhead = Actual manufacturing overhead. – Manufacturing overhead allocated for the Job
= 507,500 – 374,500
= $133,000
The under-allocated manufacturing overhead caused jobs to be under-costed by $133,000
If you are happy with the solution, please give it a positive rating. If you have any questions, please comment.
Conclusion
Above is the solution for “Requirements: 1. Compute Young’s predetermined manufacturing overhead rate. 2. How much manufacturing overhead was allocated to…“. We hope that you find a good answer and gain the knowledge about this topic of business.