Question

Check my work 9 Amberjack Company is trying to decide on an allocation base to use to assign manufacturing overhead to jobs. The company has always used direct labor hours to assign manufacturing overhead to products, but it is trying to decide whether it should use a different allocation base such as direct labor dollars or machine hours. 2 points Actual and estimated data for manufacturing overhead, direct labor cost, direct labor hours, and machine hours for the most recent fiscal year are summarized here: eBook Print Manufacturing overhead cost Direct labor cost Direct labor hours Machine hours Estimated Value $ 586,000 $ 388,000 15,700 hours 6,700 hours Actual Value $ 647,000 $ 442,000 17, 200 hours 7,700 hours References Required: 1. Based on the company's current allocation base (direct labor hours), compute the following: a. Predetermined overhead rate. (Round your answer to 2 decimal places.) b. Applied manufacturing overhead. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.) c. Over- or underapplied manufacturing overhead. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.) 2. If the company had used direct labor dollars (instead of direct labor hours) as its allocation base, compute the following: a. Predetermined overhead rate. (Round your answer to 2 decimal places, i.e. 3.63%) b. Applied manufacturing overhead. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.) c. Over- or underapplied manufacturing overhead. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.) 2 If the comnany had riced machine houre linetead of direct lahar hourel ac ite allocation hace commute the following: Mc Graw Hill < Prev 9 of 10 1 Next > Education

Answer 1

1.c)

Overhead Applied = $641,904

Actual Overhead = $647,000

Overhead was Under Applied by ($647,000-$641,904) = $5,096.

2.a)

Predetermined Rate = $586,000/$388,000

= 1.51/Labor Cost

2.b)

Over Applied = 1.51*$442,000

= $667,420

2.c)

Overhead Applied = $667,420

Actual Overhead = $647,000

Overhead was Over Applied by ($667,420-$647000) = $20,420.

3.a)

Predetermined Rate = $586,000/6,700

= $87.46/Machine Hr

3.b)

Overhead Applied = $87.46*7,700 Machine Hr

= $673,442

3.c)

Overhead Applied = $673,442

Actual Overhead = $647,000

Overhead was Over Applied by ($673,442-$647,000) = $26,442.

4) Most accurate measure is Direct Labor Hr