Xania Inc. uses a normal job-order costing system. Currently, a plantwide overhead rate based on machine hours is used. Xania's plant manager has heard that departmental overhead rates can offer significantly better cost assignments than a plantwide rate can offer. Xania has the following data for its two departments for the coming year:
Department A |
Department B |
|
Overhead costs (expected) |
$750,000 |
$330,000 |
Normal activity (machine hours) |
6,000 |
10,000 |
Required:
Job 73 Plantwide |
Job 73 Departmental |
Job 74 Plantwide |
Job 74 Departmental |
$$_________________________ over-applied/under-applied (circle one)
$$_________________________ Cost of Goods Sold increased/decreased (circle one)
1) predetermined overhead rate for the plant as a whole based on machine hours. | |||||||
= Total Overheads/ Total Machine Hours | |||||||
=($750000+330000)/(6000+10000) | |||||||
=$67.50 per machine hour | |||||||
2) predetermined overhead rates for each department using machine hours | |||||||
Department A= $750000/6000 =$125 per hour | |||||||
Department B = $330000/10000 =$33 per hour | |||||||
3) | a)overhead cost assigned to each job using the plantwide rate computed in Requirement 1. | ||||||
Job 73 | Job 74 | ||||||
Machine hours | |||||||
Department A | 25 | 40 | |||||
Department B | 50 | 15 | |||||
A) | Total | 75 | 55 | ||||
B) | Overhead Rate Per hour | $ 67.50 | $ 67.50 | ||||
Overhead Assigned (A*B) | $ 5,062.50 | $ 3,712.50 | |||||
b)computation using the departmental rates found in Requirement 2 | |||||||
Job 73 | Job 74 | ||||||
Machine hours | |||||||
1 | Department A | 25 | 40 | ||||
2 | Department B | 50 | 15 | ||||
Overhead Rates Per Hour | |||||||
3 | Department A | $ 125 | $ 125 | ||||
4 | Department B | $ 33 | $ 33 | ||||
Overhead Assigned | |||||||
5 | Department A (1*3) | $ 3,125 | $ 5,000 | ||||
6 | Department B (2*4) | $ 1,650 | $ 495 | ||||
7 | Total | $ 4,775 | $ 5,495 | ||||
3) | Absorbed overhead = 17000 hours *$67.50 =$1147500 | ||||||
Actual Overhead =$1100000 | |||||||
Overapplied =$47500 | |||||||
$47500 Cost of goods sold decreased. | |||||||
Xania Inc. uses a normal job-order costing system. Currently, a plantwide overhead rate based on machine...
Xania Inc. uses a normal job-order costing system. Currently, a plantwide overhead rate based on machine hours is used. Xania's plant manager has heard that departmental overhead rates can offer significantly better cost assignments than a plantwide rate can offer. Xania has the following data for its two departments for the coming year: Department A Department B Overhead costs (expected) $750,000 $330,000 Normal activity (machine hours) 6,000 10,000 Required: Compute a predetermined overhead rate for the plant as a whole...
Overhead Applied to Jobs, Departmental Overhead Rates Xania Inc. uses a normal job-order costing system. Currently, a plantwide overhead rate based on machine hours is used. Xania’s plant manager has heard that departmental overhead rates can offer significantly better cost assignments than a plantwide rate can offer. Xania has the following data for its two departments for the coming year: Department A Department B Overhead costs (expected) $100,000 $61,000 Normal activity (machine hours) 18,000 14,800 Required: 1. Compute a predetermined...
Overhead Applied to Jobs, Departmental Overhead Rates Xania Inc. uses a normal job-order costing system. Currently, a plantwide overhead rate based on machine hours is used. Xania’s plant manager has heard that departmental overhead rates can offer significantly better cost assignments than a plantwide rate can offer. Xania has the following data for its two departments for the coming year: Department A Department B Overhead costs (expected) $95,000 $48,000 Normal activity (machine hours) 12,000 3,800 Required: 1. Compute a predetermined...
Overhead Applied to Jobs, Departmental Overhead Rates Xania Inc, uses a normal job-order costing system. Currently, a plantwide overhead rate based on machine hours is used. Xania's plant manager has heard that departmental overhead rates can offer significantly better cost assignments than a plantwide rate can offer. Xania has the following data for its two departments for the coming year: Department A Department B Overhead costs (expected) Normal activity (machine hours) $75,000 14,500 $81,000 11,800 Required: 1. Compute a predetermined...
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