Question

Practice with textbook wording Domande 54.500 orect labores during the end Required 1. Determine the amount of under er over mange reas 136.000 (2.resor АН 2. Assuming that the entire amount of the under over located overhead is dosed out to Cost of Goods Sold, what would be the effect of their or allocated overhead on the company's gross margin for the period Outer Lecture - Page 16 O Send a chat

Answer 1

Please note image is bit not clear. Have tried to enter number as accurately as possible.

1 Pre-determined overhead rate Estimated manufacturing overheads Estimated direct labor hours Pre-determined overhead rate $650,000 a 81,250 b $8.00 a/b Manufacturing overhead applied Actual direct labor hours Pre-determined overhead rate Manufacturing overhead applied 54,500 $8 $436,000 Actual manufacturing overheads Manufacturing overhead applied Under-applied manufacturing overheads $517,500 $436,000 $81,500 2 The under-applied manufacturing overheads is adjusted in Cost of goods sold Under-applied manufacturing overheads increases the cost of goods sold Hence the Gross margin of the firm will reduce for the period