Question
In: Accounting
Test Company produces a product that passes through two departments: Department 1 and Department 2. Test...
Test Company produces a product that passes through two departments: Department 1 and Department 2. Test Company determines product cost using a normal cost system. The company applies overhead using a plant-wide rate based on machine hours. The company prepared the following estimates at the beginning of the year.
|
Department 1 |
Department 2 |
Total |
|
|
Prime cost |
$375,000 |
$700,000 |
$1,075,000 |
|
Overhead cost |
$420,000 |
$240,000 |
$660,000 |
|
Direct labor hours |
16,000 |
50,000 |
66,000 |
|
Machine hours |
100,000 |
20,000 |
120,000 |
During the year, Test Company reported the following actual results.
|
Department 1 |
Department 2 |
Total |
|
|
Prime cost |
$475,000 |
$850,000 |
$1,325,000 |
|
Overhead cost |
$450,000 |
$300,000 |
$750,000 |
|
Direct labor hours |
20,000 |
60,000 |
80,000 |
|
Machine hours |
125,000 |
25,000 |
150,000 |
Q1. Calculate the predetermined overhead rate Test Company uses to apply overhead.
a. $5 per machine hour
b. $16.2 per machine hour
c. $5.5 per machine hour
d. $10 per direct labor hour
Q2. Calculate the overhead applied to production for the year.
| a. |
$825,000 |
|
| b. |
$660,000 |
|
| c. |
$800,000 |
|
| d. |
$600,000 |
Q3. Calculate the overhead variance for the year.
| a. |
$75,000 underapplied |
|
|
b. |
$75,000 overapplied |
|
| c. |
$165,000 underapplied |
|
| d. |
$90,000 overapplied |
Q4. Calculate the total normal product cost for the year.
| a. |
$1,735,000 |
|
| b. |
$2,075,000 |
|
| c. |
$1,900,000 |
|
| d. |
$2,150,000 |
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Test Company produces a product that passes through two departments: Department 1 and Department 2. Test...
Test Company produces a product that passes through two
departments: Department 1 and Department 2. Test Company determines
product cost using a normal cost system. The company applies
overhead using departmental overhead rates. Overhead in Department
1 is applied based on machine hours. Overhead in Department 2 is
applied based on direct labor hours. The company prepared the
following estimates at the beginning of the year.
Department 1
Department 2
Total
Prime cost
$375,000
$700,000
$1,075,000
Overhead cost
$420,000
$240,000...
Company produces a product that passes through two departments: Department 1 and Department 2. Test Company...
Company produces a product that passes through two departments:
Department 1 and Department 2. Test Company determines product cost
using a normal cost system. The company applies overhead using
departmental overhead rates. Overhead in Department 1 is applied
based on machine hours. Overhead in Department 2 is applied based
on direct labor hours. The company prepared the following estimates
at the beginning of the year.
Department 1
Department 2
Total
Prime cost
$375,000
$700,000
$1,075,000
Overhead cost
$420,000
$240,000
$660,000...
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