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  • Smith Foundry in Colomus Ohio Uses A Predetermined

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    Kailash Kumar
    54 views2 pages
    The document contains information about a company's estimated overhead costs, actual machine hours, allocated overhead, manufacturing overhead costs incurred, and an explanation of undercosting and overcosting. It shows the calculation of a predetermined overhead rate of $7 per machine hour based on estimated yearly overhead costs and machine hours. It also shows applied overhead of $424,000 based on this rate and actual machine hours of 56,500, while total overhead incurred was $508,000, resulting in underallocated overhead of $84,000 and undercosted jobs.

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    Smith Foundry in Colomus Ohio Uses a Predetermined

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    The document contains information about a company's estimated overhead costs, actual machine hours, allocated overhead, manufacturing overhead costs incurred, and an explanation of undercosting and overcosting. It shows the calculation of a predetermined overhead rate of $7 per machine hour based on estimated yearly overhead costs and machine hours. It also shows applied overhead of $424,000 based on this rate and actual machine hours of 56,500, while total overhead incurred was $508,000, resulting in underallocated overhead of $84,000 and undercosted jobs.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    54 views2 pages

    Smith Foundry in Colomus Ohio Uses A Predetermined

    Uploaded by

    Kailash Kumar
    The document contains information about a company's estimated overhead costs, actual machine hours, allocated overhead, manufacturing overhead costs incurred, and an explanation of undercosting and overcosting. It shows the calculation of a predetermined overhead rate of $7 per machine hour based on estimated yearly overhead costs and machine hours. It also shows applied overhead of $424,000 based on this rate and actual machine hours of 56,500, while total overhead incurred was $508,000, resulting in underallocated overhead of $84,000 and undercosted jobs.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    of 2

    Ques 1

    Estimated
    Estimated yearly / yearly machine =
    overhead costs hours

    630,000 / 90,000 =

    Ques 2

    Predeterm
    ined
    manufact Allocated
    Actual machine hours x =
    uring overhead
    overhead
    rate

    56,500 7 424,000

    Ques 3

    Depreciation on manufacturing plant and 480,000


    equipment

    Property taxes on plant 19,500

    Plant janitors' wages 8,500

    Total manufacturing overhead 508,000

    Manufacturing costs
    Applied 424,000
    incurred 508,000
    Underallocated by 84,000

    Ques 4
    jobs were undercosted by 84,000

    Jobs were overcosted if the overhead allocated is more than the overhead incurred. Jobs were undercosted
    if the overhead allocated is less than the overhead incurred.
    Predetermined overhead rate

    per
    7 machine
    hour

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