Exercise 15-5 Duggan Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $325,780 for the year, and machine usage is estimated at 125,300 hours. For the year, $350,103 of overhead costs are incurred and 132,400 hours are used(b) The parts of this question must be completed in order. This part will be available when you complete the part above
(a) Compute the manufacturing overhead rate for the year. (Round answers to 2 decimal places, e.g. 1.25.) Manufacturing overhead rate $ per machine hour
(b) What is the amount of under- or overapplied overhead at December 31?
(c) Assuming the under- or overapplied overhead for the year is not allocated to inventory accounts, prepare the adjusting entry to assign the amount to cost of goods sold.
Exercise17-1
Wilkins Inc. has two type of hand bags standard and custom. The controller has decided to use a plant wide overhead rate base on direct labor costs. The president as heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine set up. Presented below is information related to the company’s operations.
Standard Custom Standard Custom
Direct labor costs $53,000 $108,000
Machine hours 1,190 1,500
Setup hours 110 440 110 440
Instruction
a)Compute the Overhead rate using the traditional (plantwide) approach
b) Compute the overhead rates using the activity-based costing approach.
c)Determine the difference in allocation between the two approaches.
(a) Compute the overhead rate using the traditional (plant-wide) approach.
(b) Compute the overhead rates using the activity-based costing approach.
(c) Determine the difference in allocation between the two approaches.
