Question

1. Predetermined Overhead Rate, Applied Overhead, Unit Cost

   Ripley, Inc., costs products using a normal costing system. The following data are available for last year:

   Budgeted:
   Overhead		$343,000
   Machine hours		88,000
   Direct labor hours		9,800
   Actual:
   Overhead		$342,200
   Machine hours		85,800
   Direct labor hours		9,580
   Prime cost		$1,464,700
   Number of units		180,000

   Overhead is applied on the basis of direct labor hours.

   Required:

   1. What was the predetermined overhead rate?
   $fill in the blank 1 per direct labor hour

   2. What was the applied overhead for last year?
   $fill in the blank 2

   3. Was overhead over- or underapplied, and by how much?
     = $fill in the blank 4

   4. What was the total cost per unit produced? (Carry your answer to four significant digits.)
   $fill in the blank 5 per unit

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Answer 1

Question 1

Predetermined Overhead Rate = Budgeted Overhead / Budgeted Direct Labour Hours

Budgeted Direct Labour Hours = 9,800 Hours

Budgeted Overhead = $ 343,000

Predetermined Overhead Rate = 343,000 / 9,800

Predetermined Overhead Rate = $ 35 per Direct Labour Hour

Question 2

Manufacturing Overhead Applied = Actual Direct Labour Hours * Predetermined Overhead Rate

Predetermined Overhead Rate = $ 35 per Direct Labour Hour

Actual Direct Labour Hours = 9,580 Hours

Manufacturing Overhead Applied = 9,580 * 35

Manufacturing Overhead Applied = $ 335,300

Question 3

Manufacturing Overhead Underapplied / (Overapplied) = Actual Overhead Cost - Manufacturing Overhead Applied

Actual Overhead Cost = $ 342,200

Manufacturing Overhead Applied = $ 335,300

Manufacturing Overhead Underapplied / (Overapplied) = 342,200 - 335,300

Manufacturing Overhead Underapplied = $ 6,900

Question 4

Partuculars	Amount
Prime Cost	1,464,700
Add: Manufacturing Overhead Applied	335,300
Total Product Cost	1,800,000
÷ Number of Units Produced	180,000
Cost per Unit	$ 10

Cost per Unit Produced = $ 10