Casa Blanca Corp. produces sparkplugs and applies overhead to production based on direct labor hours. One hundred sparkplugs can be manufactured in one direct labor hour. Casa Blanca's accountant is calculating Casa Blanca's predetermined overhead rates for the upcoming year. Thus far, the accountant has compiled the following information.

Required:
a. Assume that Casa Blanca decides to produce 1,800,000 sparkplugs during 2011.
(1) How many direct labor hours are expected to be worked during 2011?
(2) What will Casa Blanca's expected total indirect material cost be for 2011?
(3) What will Casa Blanca's 2011 predetermined variable and fixed overhead rates be?
b. Assume that Casa Blanca decides to produce 2,400,000 sparkplugs during 2011.
(1) What will Casa Blanca's 2011 predetermined variable and fixed overhead rates be?
(2) What will Casa Blanca's expected total indirect material cost be for 2011?
(3) What will Casa Blanca's expected property taxes be for 2011?
c. Assume that Casa Blanca uses 2,400,000 units as the basis for computing its predetermined overhead rate. In 2011, Casa Blanca produces 2,200,000 units. Total actual variable and fixed overhead were, respectively, $768,100 and $264,500. By what amount was total overhead overapplied or underapplied?

Question

Casa Blanca Corp. produces sparkplugs and applies overhead to production based on direct labor hours. One hundred sparkplugs can be manufactured in one direct labor hour. Casa Blanca's accountant is calculating Casa Blanca's predetermined overhead rates for the upcoming year. Thus far, the accountant has compiled the following information.
  
Required:
a.	Assume that Casa Blanca decides to produce 1,800,000 sparkplugs during 2011. 
	(1)	How many direct labor hours are expected to be worked during 2011?
	(2)	What will Casa Blanca's expected total indirect material cost be for 2011?
	(3)	What will Casa Blanca's 2011 predetermined variable and fixed overhead rates be?
b.	Assume that Casa Blanca decides to produce 2,400,000 sparkplugs during 2011. 
	(1)	What will Casa Blanca's 2011 predetermined variable and fixed overhead rates be?
	(2)	What will Casa Blanca's expected total indirect material cost be for 2011?
	(3)	What will Casa Blanca's expected property taxes be for 2011?
c.	Assume that Casa Blanca uses 2,400,000 units as the basis for computing its predetermined overhead rate. In 2011, Casa Blanca produces 2,200,000 units. Total actual variable and fixed overhead were, respectively, $768,100 and $264,500. By what amount was total overhead overapplied or underapplied?

Quizplus · Accepted Answer

The Answer of Casa Blanca Corp. produces sparkplugs and applies overhead to production based on direct labor hours. One hundred sparkplugs can be manufactured in one direct labor hour. Casa Blanca's accountant is calculating Casa Blanca's predetermined overhead rates for the upcoming year. Thus far, the accountant has compiled the following information.
  
Required:
a.	Assume that Casa Blanca decides to produce 1,800,000 sparkplugs during 2011. 
	(1)	How many direct labor hours are expected to be worked during 2011?
	(2)	What will Casa Blanca's expected total indirect material cost be for 2011?
	(3)	What will Casa Blanca's 2011 predetermined variable and fixed overhead rates be?
b.	Assume that Casa Blanca decides to produce 2,400,000 sparkplugs during 2011. 
	(1)	What will Casa Blanca's 2011 predetermined variable and fixed overhead rates be?
	(2)	What will Casa Blanca's expected total indirect material cost be for 2011?
	(3)	What will Casa Blanca's expected property taxes be for 2011?
c.	Assume that Casa Blanca uses 2,400,000 units as the basis for computing its predetermined overhead rate. In 2011, Casa Blanca produces 2,200,000 units. Total actual variable and fixed overhead were, respectively, $768,100 and $264,500. By what amount was total overhead overapplied or underapplied?