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Exam 17: The Predetermined Overhead Rate and Capacity

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Question 21

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The management of Gruwell Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year.The company's controller has provided an example to illustrate how this new system would work.In this example,the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 48,000 machine-hours.In addition,capacity is 53,000 machine-hours and the actual activity for the year is 47,700 machine-hours.All of the manufacturing overhead is fixed and is $1,144,800 per year.For simplicity,it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity and the actual amount of manufacturing overhead for the year.Job J42O,which required 40 machine-hours,is one of the jobs worked on during the year. Required: a.Determine the predetermined overhead rate if the predetermined overhead rate is based on the estimated amount of the allocation base. b.Determine how much overhead would be applied to Job J42O if the predetermined overhead rate is based on estimated amount of the allocation base. c.Determine the underapplied or overapplied manufacturing overhead for the year if the predetermined overhead rate is based on the estimated amount of the allocation base. d.Determine the predetermined overhead rate if the predetermined overhead rate is based on the amount of the allocation base at capacity. e.Determine how much overhead would be applied to Job J42O if the predetermined overhead rate is based on the amount of the allocation base at capacity. f.Determine the underapplied or overapplied manufacturing overhead for the year if the predetermined overhead rate is based on the amount of the allocation base at capacity.

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a.Predetermined overhead rate = Estimate...

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Question 22

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The management of Bow Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 54,000 machine-hours. In addition, capacity is 68,000 machine-hours and the actual level of activity for the year is 53,100 machine-hours. All of the manufacturing overhead is fixed and is $2,129,760 per year. For simplicity, it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity. It is further assumed that this is also the actual amount of manufacturing overhead for the year. A number of jobs were worked on during the year, one of which was Job E82X. This job required 100 machine-hours. -If the company bases its predetermined overhead rate on capacity,the predetermined overhead rate is closest to:

A) $41.92
B) $31.32
C) $39.44
D) $40.11

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Question 23

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The management of Foy Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 86,000 machine-hours. In addition, capacity is 94,000 machine-hours and the actual level of activity for the year is 88,200 machine-hours. All of the manufacturing overhead is fixed and is $6,790,560 per year. For simplicity, it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity. It is further assumed that this is also the actual amount of manufacturing overhead for the year. -If the company bases its predetermined overhead rate on the estimated amount of the allocation base for the upcoming year,by how much was manufacturing overhead underapplied or overapplied?

The management of Keeter Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 89,000 machine-hours. In addition, capacity is 96,000 machine-hours and the actual level of activity for the year is 88,600 machine-hours. All of the manufacturing overhead is fixed and is $7,176,960 per year. For simplicity, it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity. It is further assumed that this is also the actual amount of manufacturing overhead for the year. -If the company bases its predetermined overhead rate on capacity,by how much was manufacturing overhead underapplied or overapplied?

The management of Bow Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 54,000 machine-hours. In addition, capacity is 68,000 machine-hours and the actual level of activity for the year is 53,100 machine-hours. All of the manufacturing overhead is fixed and is $2,129,760 per year. For simplicity, it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity. It is further assumed that this is also the actual amount of manufacturing overhead for the year. A number of jobs were worked on during the year, one of which was Job E82X. This job required 100 machine-hours. -If the company bases its predetermined overhead rate on capacity,the amount of manufacturing overhead charged to the job E82X is closest to:

The management of Griswell Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity.The company's controller has provided an example to illustrate how this new system would work.In this example,the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 39,000 machine-hours.In addition,capacity is 45,000 machine-hours and the actual level of activity for the year is 40,200 machine-hours.All of the manufacturing overhead is fixed and is $702,000 per year.For simplicity,it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity.It is further assumed that this is also the actual amount of manufacturing overhead for the year.If the company bases its predetermined overhead rate on capacity,by how much was manufacturing overhead underapplied or overapplied?

The management of Daguio Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 54,000 machine-hours. In addition, capacity is 63,000 machine-hours and the actual level of activity for the year is 53,000 machine-hours. All of the manufacturing overhead is fixed and is $1,871,100 per year. For simplicity, it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity. It is further assumed that this is also the actual amount of manufacturing overhead for the year. -If the company bases its predetermined overhead rate on capacity,the predetermined overhead rate is closest to: