Question

In: Accounting

True or false: If false explain. 1. The Jordan company applies manufactory overhead based on direct...

True or false: If false explain.

1. The Jordan company applies manufactory overhead based on direct labor hours. Current and budgeted information related to direct labor and overhead for 2020 are listed below for indirect manufacturing costs.
Budget: Direct labor hours 300,000 Manufactory overhead 360,000

Actual results: DL 380,000 Manufactory Overhead 350,000

So, the cost are underapplied for $20,000. Answer: ???

2. Audi Company's indirect manufacturing costs were over applied by 27,000 in 2020. In that year, a total manufactory overhead of 508,000 had been budgeted and manufactury overhead of 496,000 was applied. The overhead that was currently incurred in 2020 is 469,000. Answer: ???

3. The process of allocating costs to a particular production, order, or service to a customer is known as job costing. Answer: ???

4. The debit from the manufacturing overhead account will reflect Actual costs of direct labor accounts and indirect manufacturing costs. Answer:???

5. Assuming that the normal costing system is used and is based on direct labor, the application rate for indirect manufacturing costs could be calculated by dividing: Budgeted manufacturing overhead between current direct labor hours. Answer: ???

Solutions

Expert Solution

Solution 1:

Overhead rate per DL hour = $360,000 / 300000 = $1.20 per DLH

Overhead applied = 380000*$1.20 = $456,000

Actual overhead = $350,000

Overapplied overhead = $456,000 - $350,000 = $106,000

Hence given statement is false.

Solution 2:

As manufacturing overhead is over applied by $27,000, therefore actual overhead incurred = Overhead applied - Over applied overhead = $496,000 - $27,000 = $469,000

Hence statement holds true.

Solution 3:

True, The process of allocating costs to a particular production, order, or service to a customer is known as job costing.

Solution 4:

False, The debit from the manufacturing overhead account will reflect Actual costs of indirect manufacturing costs only.

Solution 5:

False, Assuming that the normal costing system is used and is based on direct labor, the application rate for indirect manufacturing costs could be calculated by dividing: Budgeted manufacturing overhead between budgeted direct labor hours

ekkarill92 answered 2 years ago
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