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In: Accounting

ABC has estimated their overhead for the period will be $500,000. They use machine hours as...

ABC has estimated their overhead for the period will be $500,000. They use machine hours as an allocation base for each job and they estimate they will use 40,000 machine hours this year. What is their predetermined overhead rate for the year?

Question 1 options:

	$12.50 per machine hour.
	cannot be determined.
	$2,000,000
	$0.08 per machine hour.

Question 2 (1 point)

Assume ABC has a predetermined overhead rate of $15 per machine hour. Job #103 has used 100 direct labor hours and 50 machine hours. It's direct material costs are $1,600 and the cost of direct labor is $20 per hour. What is the total labor cost of Job #103?

Question 2 options:

	$750
	$4,350
	$2,000
	$3,600

Question 3 (1 point)

Assume ABC has a predetermined overhead rate of $15 per machine hour. Job #103 has used 100 direct labor hours and 50 machine hours. It's direct material costs are $1,600 and the cost of direct labor is $20 per hour. What is the total cost of Job #103?

Question 3 options:

	$2,000
	$3,600
	$750
	$4,350

Question 4 (1 point)

ABC had estimated $500,000 in overhead costs. At the end of the year, its actual overhead was $486,000. Its predetermined overhead rate was $15 per machine hour and it used 32,000 machine hours. What is the amount of Applied Overhead for the year?

Question 4 options:

	$486,000
	$480,000
	$14,000
	$500,000

Question 5 (1 point)

ABC had estimated $500,000 in overhead costs. At the end of the year, its actual overhead was $486,000. Its predetermined overhead rate was $15 per machine hour and it used 32,000 machine hours. What is the amount of Over-/Under- Applied Overhead for the year?

Question 5 options:

	$6,000 Under applied
	$14,000 Under applied
	$20,000 Under applied
	$14,000 Over applied

Expert Solution

Question 1 :

Estimated overhead	$500000
Machine hours	40000 hrs
Pre-determined OH rate	$12.5 per machine hour

so option $12.5 per machine hour is correct.

Question 2 :

Pre-determined overhead rate (given)-$15 per machine hour.

Job #103 used 100 direct labour hours and 50 machine hours

Direct labour cost-$20 per hour

so Direct labour cost- ($20*100)=$2000. As the overhead does not specify the indirect labour. total labour cost will be $2000.

So $2000 is the correct answer.

Question 3 :

Total cost of the job #103 will be (direct material+ direct labour + overhead cost)

= ($1600+$2000+ overhead cost-($15*50))= $4350

So $4350 is the correct option.

Question 4 :

Estimated OH cost- $500000

Actual OH-$486000

Pre-determined OH rate- $15 per machine hr

ABC used 32000 machine hours. So Applied OH was ($15*32000)=$480000.

So $480000 is the correct option.

Question 5 :

Estimated OH cost- $500000

Actual OH-$486000

Applied Overhead was $480000

Applied OH was less than actual OH Hence it is under applied to the tune of ($486000-$480000)=$6000

So $6000 is the correct option.

ekkarill92 answered 2 years ago

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