13. LO.1 (Predetermined OH rate) For 2010, Omaha Mechanical has a monthly overhead cost formula of $42,900 + $6 per direct

13. LO.1 (Predetermined OH rate) For 2010, Omaha Mechanical has a monthly overhead cost formula of $42,900 + $6 per direct

13. LO.1 (Predetermined OH rate) For 2010, Omaha Mechanical has a monthly overheadcost formula of $42,900 + $6 per direct labor hour. The firms 2010 expected annual capacity is 78,000 direct labor hours, to be incurred evenly each month. Makingone unit of the companys product requires 1.5 direct labor hours.a. Determine the total overhead to be applied per unit of product in 2010.b. Prepare journal entries to record the application of overhead to Work in ProcessInventory and the incurrence of $128,550 of actual overhead in January 2010, when6,390 direct labor hours were worked.c. Given the actual direct labor hours in part (b), how many units would you haveexpected to be produced in January?14. LO.1 (Predetermined OH rate) Langston Automotive Accessories applies overheadusing a combined rate for fixed and variable overhead. Th e rate is 250 percent of directlabor cost. During the first three months of the current year, actual costs incurred were asfollows:Direct Labor Cost Actual OverheadJanuary $180,000 $440,000February 165,000 420,400March 170,000 421,000a. What amount of overhead was applied to production in each of the threemonths?b. What was the under applied or over applied overhead for each of the three monthsand for the first quarter?16. LO.2 (Under applied or over applied overhead) At the end of 2010, Jackson TankCompanys accounts showed a $66,000 credit balance in Manufacturing OverheadControl. In addition, the company had the following account balances:Work in Process Inventory $384,000Finished Goods Inventory 96,000Cost of Goods Sold 720,000a. Prepare the necessary journal entry to close the overhead account if the balance isconsidered immaterial.b. Prepare the necessary journal entry to close the overhead account if the balance isconsidered material.c. Which method do you believe is more appropriate for the company and why?21. LO.4 (Highlow method) Information about Indiana Industrials utility cost for thelast six months of 2010 follows. The highlow method will be used to develop a costformula to predict 2011 utility charges, and the number of machine hours has beenfound to be an appropriate cost driver. Data for the first half of 2010 are not beingconsidered because the utility company imposed a significant rate change as of July 1,2010.Month Machine Hours Utility CostJuly 33,750 $13,000August 34,000 12,200September 33,150 11,040October 32,000 11,960November 31,250 11,500December 31,000 11,720a. What is the cost formula for utility expense?b. What is the budgeted utility cost for September 2011 if 31,250 machine hours areprojected?


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