Question

Question 4 --/1 View Policies Current Attempt in Progress Kim-Sunland, Inc. makes costumes for movies and television shows. Sunland Kimberly, the company's owner, prepared the following estimates for the upcoming year: Manufacturing overhead cost Direct labor hours Direct labor cost Machine hours $660,000 30,000 $301,000 24.900 (a) Assume that Kim-Sunland applies manufacturing overhead on the basis of direct labor hours. During the year, 33,200 direct labor hours were worked. How much overhead was applied to work in process? If actual manufacturing overhead for the year was $729,000, was overhead under-or overapplied during the year? By how much? (For computation purposes round overhead rates to 2 decimal places, eg. 52.75. Round final answers to 0 decimal places, eg. 5,275.) Applied Overhead Overhead $ (b) Assume that Kim-Sunland applies manufacturing overhead on the basis of direct labor cost. During the year, $329,000 in direct labor cost was incurred. How much overhead was applied to work in process during the year? If actual manufacturing overhead for the year was $729,000, was overhead under-or overapplied during the year? By how much? (For computation purposes round overhead rates to 2 decimal places, e.g. 52.75%. Round final answers to decimal places, e.g. 5,275.) Applied Overhead Overhead $ (c) Assume that Kim-Sunland applies manufacturing overhead on the basis of machine hours. During the year, 24.400 machine hours were worked. How much overhead was applied to work in process during the year? If actual manufacturing overhead for the year was $729,000, was overhead under-or overapplied during the year? By how much? (For computation purposes round overhead rates to 2 decimal places, e.g. 52.75. Round final answers to decmial places, e.g. 5,275.) Applied Overhead $ Overhead $

Answer 1

a)

Predetermined overhead rate = Estimated Manufacturing overheads/Estimated Direct labor hours

= 660,000/30,000

= $22 per Direct labor hour

Overhead applied = Actual direct labor hours used x  Predetermined overhead rate

= 33,200 x 22

= $730,400

Actual manufacturing overheads = $729,000

Over applied manufacturing overheads = Applied manufacturing overheads - Actual manufacturing overheads

= $730,400 - $729,000

= $1,400

b)

Predetermined overhead rate = Estimated Manufacturing overheads/Estimated Direct labor cost

= 660,000/301,000

= $2.19 per direct labor dollar

Overhead applied = Actual direct labor cost x  Predetermined overhead rate

= 329,000 x 2.19

= $720,510

Actual manufacturing overheads = $729,000

Under applied manufacturing overheads = Actual manufacturing overheads - Applied manufacturing overheads

= $729,000 - $720,510

= $8,490

c)

Predetermined overhead rate = Estimated Manufacturing overheads/Estimated machine hours

= 660,000/24,900

= $26.51 per machine hour

Overhead applied = Actual machine hours used x  Predetermined overhead rate

= 24,400 x 26.51

= $646,844

Actual manufacturing overheads = $729,000

Under applied manufacturing overheads = Actual manufacturing overheads - Applied manufacturing overheads

= $729,000 - $646,844

= $82,156

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