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    Accounting

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    Ferr
    This document discusses different methods for allocating overhead costs across multiple products. It compares: 1) A plantwide predetermined overhead rate that allocates total overhead costs across all products based on direct labor hours. This results in an overhead rate of $2 per direct labor hour. 2) Predetermined overhead rates set at the department level, with one department allocating overhead based on direct labor hours and the other based on machine hours. 3) Calculating actual overhead costs and comparing to the total applied overhead to determine if there is under or overapplied overhead. The document then provides an example of calculating unit production costs for two different models using a plantwide predetermined overhead rate based on direct labor hours.

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    Accounting

    Uploaded by

    Ferr
    11 views4 pages
    This document discusses different methods for allocating overhead costs across multiple products. It compares: 1) A plantwide predetermined overhead rate that allocates total overhead costs across all products based on direct labor hours. This results in an overhead rate of $2 per direct labor hour. 2) Predetermined overhead rates set at the department level, with one department allocating overhead based on direct labor hours and the other based on machine hours. 3) Calculating actual overhead costs and comparing to the total applied overhead to determine if there is under or overapplied overhead. The document then provides an example of calculating unit production costs for two different models using a plantwide predetermined overhead rate based on direct labor hours.

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    This document discusses different methods for allocating overhead costs across multiple products. It compares: 1) A plantwide predetermined overhead rate that allocates total overhead costs across all products based on direct labor hours. This results in an overhead rate of $2 per direct labor hour. 2) Predetermined overhead rates set at the department level, with one department allocating overhead based on direct labor hours and the other based on machine hours. 3) Calculating actual overhead costs and comparing to the total applied overhead to determine if there is under or overapplied overhead. The document then provides an example of calculating unit production costs for two different models using a plantwide predetermined overhead rate based on direct labor hours.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    11 views4 pages

    Accounting

    Uploaded by

    Ferr
    This document discusses different methods for allocating overhead costs across multiple products. It compares: 1) A plantwide predetermined overhead rate that allocates total overhead costs across all products based on direct labor hours. This results in an overhead rate of $2 per direct labor hour. 2) Predetermined overhead rates set at the department level, with one department allocating overhead based on direct labor hours and the other based on machine hours. 3) Calculating actual overhead costs and comparing to the total applied overhead to determine if there is under or overapplied overhead. The document then provides an example of calculating unit production costs for two different models using a plantwide predetermined overhead rate based on direct labor hours.

    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 4

    P4-12

    1 Plantwide predetermined OH rate, Overhead Assigned


    Plantwide predet OH rate = overhead cost/direct labor hour
    = (240.000+720.000)/(400.000+80.000)
    = 960.000/480.000
    = $ 2.0 per dlh

    Product A Product B
    Direct labor hour
    (360.000+60.000) $ 360,000
    (92.000+24.000) $ 116,000
    Plantwide predet OH rate 2 2
    Overhead Assigned $ 720,000 $ 232,000

    2 Predetermind Department, Overhead Assigned


    Dept 1 = overhead cost/direct labor hour
    = 240.000/400.000
    = $ 0.6 per dlh
    Dept 2 = overhead cost/machine hours
    = 720.000/120.000
    = $ 6.0 per mh

    Product A Product B
    Dept 1 (300.000 x 0,6) 180,000
    (92.000 x 0,6) 55,200
    Dept 2 (20.000 x 6) 120,000
    (100.000 x 6) 600,000
    Overhead Assigned $ 300,000 $ 655,200

    3 Department Rates
    Total Appllied Overhead
    (300.000+655.200) = 955,200
    Total Actual Overhead
    (250.000+770.000) = 1,020,000
    Underapplied - 64,800

    4 Journal entry
    cost of goods sold $ 64,800
    overhead control $ 64,800
    P4-13
    1 Cost per unit
    Total Standard ModelDeluxe Model
    Prime Cost $ 6,500,000 $ 3,000,000 $ 3,500,000
    Overhead cost 3,000,000 1,500,000 1,500,000
    Total Cost $ 9,500,000 $ 4,500,000 $ 5,000,000
    Unit of production 20,000 10,000
    Cost per unit $ 225 $ 500

    Overhead rate/direct labor hour = 3.000.000/(50.000+50.000)


    = 3.000.000/100.000
    = $ 30

    Overhead Assigned: Standard 30x50.000= 1,500,000


    Deluxe 30x50.000= 1,500,000

    Unit cost : Standar model (3.000.000+1.500.000)/20.000= $ 225


    Deluxe model (3.500.000+1.500.000)/10.000= $ 500

    2 Activity Cost
    standar model deluxe model
    Activity overhead
    Maintenance OH Cost OH Cost
    Engineering
    (hour used)
    support $ 400,000 4,000 $ 80,000 16,000 $ 320,000
    (hours)
    Material handling 600,000 9,000 180,000 21,000 420,000
    (number of moves)
    Setups 800,000 10,000 200,000 30,000 600,000
    Purchasing
    (number
    (number ofof setups) 500,000 40 50,000 360 450,000
    requisitions)
    Receiving 300,000 500 100,000 1,000 200,000
    Paying suppliers
    (orders
    (inovicesprocessed) 200,000 2,000 80,000 3,000 120,000
    processed) 200,000 2,500 100,000 2,500 100,000
    Total $ 790,000 $ 2,210,000
    Expected quantity 20,000 10,000
    Overhead cost per unit $ 39.5 $ 221
    unit

    20
    20
    20
    1,250
    200
    40
    40
    P4-14
    1 Overhead Cost using plantwide
    plantwide = overhead cost/direct labor hour

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