accounting question 380682
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Amberjack Company is trying to decide on an allocation base to use to assign manufacturing overhead to jobs. In the past, the company has always used direct labor hours to assign manufacturing overhead to products, but it is trying to decide whether it should use a different allocation base such as direct labor dollars or machine hours. |
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Actual and estimated data for manufacturing overhead, direct labor cost, direct labor hours, and machine hours for the most recent fiscal year are summarized here: Don't use plagiarized sources. Get Your Custom Essay on
accounting question 380682
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| Estimated Value | Actual Value | |
| Manufacturing overhead cost | $732,000 | $842,000 |
| Direct labor cost | $366,000 | $377,000 |
| Direct labor hours | 14,640 hours | 16,600 hours |
| Machine hours | 18,300 hours | 17,500 hours |
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| Requirement 1: |
| Based on the companys current allocation base (direct labor hours), compute the following: |
| (a) | Predetermined overhead rate. (Omit the “$” sign in your response.) |
| Predetermined overhead rate | $ per direct labor hour |
| (b) | Applied manufacturing overhead. (Omit the “$” sign in your response.) |
| Manufacturing overhead | $ |
| (c) |
Over or underapplied manufacturing overhead. (Input the amount as positive value. Omit the “$” sign in your response.) |
| Overhead | $ |
| Requirement 2: |
| If the company had used direct labor dollars (instead of direct labor hours) as its allocation base, compute the following: |
| (a) | Predetermined overhead rate. (Omit the “%” sign in your response.) |
| Predetermined overhead rate | % of direct labor cost |
| (b) | Applied manufacturing overhead. (Omit the “$” sign in your response.) |
| Manufacturing overhead | $ |
| (c) |
Over or underapplied manufacturing overhead. (Input the amount as positive value. Omit the “$” sign in your response.) |
| Overhead | $ |
| Requirement 3: |
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If the company had used machine hours (instead of direct labor hours) as its allocation base, compute the following: |
| (a) | Predetermined overhead rate. (Omit the “$” sign in your response.) |
| Predetermined overhead rate | $ per machine hour |
| (b) | Applied manufacturing overhead. (Omit the “$” sign in your response.) |
| Manufacturing overhead | $ |
| (c) |
Over or underapplied manufacturing overhead. (Input the amount as positive value. Omit the “$” sign in your response.) |
| Overhead | $ |
| Requirement 4: |
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Based on last years data alone, which allocation base would have provided the most accurate measure for applying manufacturing overhead costs to production? |
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