Question

1 Platinum Tracks computes its predetermined overhead rate at the beginning of each year based on the estimated studio overhead cost and the estimated hours of studio service for the year. Using this approach, how much overhead would have been applied to the Verde Baja job last year? How about this year? 2 The president of Platinum Tracks has heard that some companies in the industry have changed to a system of computing the predetermined overhead rate based on the hours of studio service that could be provided at capacity. He would like to know what effect this method would have on job costs. How much overhead would have been applied using this method to the Verde Baja job if it had been done last year? This year? 3. If Platinum Tracks computes its predetermined overhead rate based on the hours of studio service that could be provided at capacity as in (2) above, how much unused capacity cost would the company have incurred last year? This year? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Platinum Tracks computes its predetermined overhead rate at the beginning of each year based on the estimated studio overhead cost and the estimated hours of studio service for the year. Using this approach, how much overhead would have been applied to the Verde Baja job last year? How about this year? (Round your answers to the nearest whole dollar amount.) Last Year This Year Overhead applied to the Verde Baja job Required 2 >

Answer 1

1) Estimated studio overhead cost (a) Estimated hours of studio service (b) Predetermined overhead rate (c = a/b) Verde Baja job's studio hours (d) Overhead applied to the Verde Baja job (e=c* d) Last Year This year $105,000 $105,000 1,300 1,050 $80.77 $100.00 45 45 $3,635 $4,500 2) Estimated studio overhead cost at capacity (a) Hours of studio service at capacity (b) Predetermined overhead rate (c = a/b) Verde Baja job's studio hours (d) Overhead applied to the Verde Baja job (e=c* d) Last Year This year $105,000 $105,000 2.100 2,100 $50.00 $50.00 45 $2,250 $2,250 45