Question 1

Collins Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs.The following information applies to the Corporation for the current year:  The manufacturing overhead cost for the current year will be:
A)$17,000 overapplied
B)$17,000 underapplied
C)$55,000 overapplied
D)$55,000 underapplied

Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $240,000 ÷ $300,000 = 0.80
Overhead over or underapplied
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Question 2

At the beginning of the year,manufacturing overhead for the year was estimated to be $477,590.At the end of the year,actual direct labor-hours for the year were 29,000 hours,the actual manufacturing overhead for the year was $472,590,and manufacturing overhead for the year was overapplied by $110.If the predetermined overhead rate is based on direct labor-hours,then the estimated direct labor-hours at the beginning of the year used in the predetermined overhead rate must have been:
A)29,300 direct labor-hours
B)28,987 direct labor-hours
C)28,993 direct labor-hours
D)29,000 direct labor-hours

Accepted Answer

Underapplied (overapplied)manufacturing overhead = Actual manufacturing overhead - Manufacturing overhead applied
-$110 = $472,590 - Overhead applied
Manufacturing overhead applied = $472,590 + $110 = $472,700
Manufacturing overhead applied = Predetermined overhead rate × Actual direct labor-hours
Predetermined overhead rate = Manufacturing overhead applied ÷ Actual direct labor-hours
= $472,700 ÷ 29,000 direct labor-hours
= $16.30 per direct labor-hour
Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated direct labor-hours
Estimated direct labor-hours = Estimated total manufacturing overhead ÷ Predetermined overhead rate
= $477,590 ÷ $16.30 per direct labor-hour
= 29,300 direct labor-hours

Question 3

Jameson Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs.The Corporation has provided the following estimated costs for the next year:  Jameson estimates that 24,000 direct labor-hours will be worked during the year.The predetermined overhead rate per hour will be:
A)$2.00
B)$2.79
C)$3.00
D)$4.00

Accepted Answer

The answer of Jameson Corporation uses a predetermined overhead rate...

Question 4

The following T-accounts have been constructed from last year's records at C&C Manufacturing:      C&C Manufacturing uses job-order costing with a predetermined overhead rate and applies manufacturing overhead to jobs based on direct labor costs.What is the predetermined overhead rate?
A)125%
B)120%
C)100%
D)105%

Accepted Answer

Entry (b)refers to materials from the Raw Materials account.Entry (c)in the Manufacturing Overhead account must refer to indirect labor because the corresponding entry in the Work In Process account must be for direct labor.Entry (c)could not be for manufacturing overhead because there would be no entry in Work In Process.Therefore,entry (c)must be for direct and indirect labor.The direct labor must be $154,000 and the manufacturing overhead applied is the $192,500 credit entry (e)in the Manufacturing Overhead account.Therefore,
Overhead applied = Predetermined overhead rate × Amount of the allocation base incurred
$192,500 = Predetermined overhead rate × $154,000
Predetermined overhead rate = $192,500 ÷ $154,000 = 1.25

Question 5

Paulson Corporation uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs.The Corporation has provided the following estimated costs for next year:  Paulson estimated that 40,000 direct labor-hours and 20,000 machine-hours would be worked during the year.The predetermined overhead rate per machine-hour will be:
A)$1.60
B)$2.10
C)$1.00
D)$1.05

Accepted Answer

To calculate the predetermined overhead rate per machine-hour, we need to divide the total estimated manufacturing overhead costs by the estimated total machine-hours.
Predetermined overhead rate per machine-hour = Total estimated manufacturing overhead costs / Estimated total machine-hours
= ($210,000 + $135,000 + $45,000) / 20,000 machine-hours
= $390,000 / 20,000 machine-hours
= $19.50 per machine-hour
Therefore, the answer is B, since $19.50 per machine-hour is closest to $2.10 per machine-hour.

Question 6

On the Schedule of Cost of Goods Manufactured,the final Cost of Goods Manufactured figure represents:
A)the amount of cost charged to Work in Process during the period.
B)the amount of cost transferred from Finished Goods to Cost of Goods Sold during the period.
C)the amount of cost placed into production during the period.
D)the amount of cost of goods completed during the current year whether they were started before or during the current year.

Accepted Answer

The answer of On the Schedule of Cost of Goods...

Question 7

Hibshman Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year.At the beginning of the most recently completed year,the Corporation estimated the machine-hours for the upcoming year at 10,000 machine-hours.The estimated variable manufacturing overhead was $6.82 per machine-hour and the estimated total fixed manufacturing overhead was $230,200.The predetermined overhead rate for the recently completed year was closest to:
A)$29.84 per machine-hour
B)$23.15 per machine-hour
C)$23.02 per machine-hour
D)$6.82 per machine-hour

Accepted Answer

Estimated total manufacturing overhead = $230,200 + ($6.82 per machine-hour × 10,000 machine-hours)= $298,400
Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $298,400 ÷ 10,000 machine-hours = $29.84 per machine-hour

Question 8

Sawyer Manufacturing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs.Last year,the Corporation worked 57,000 actual direct labor-hours and incurred $345,000 of actual manufacturing overhead cost.The Corporation had estimated that it would work 55,000 direct labor-hours during the year and incur $330,000 of manufacturing overhead cost.The Corporation's manufacturing overhead cost for the year was:
A)overapplied by $15,000
B)underapplied by $15,000
C)overapplied by $3,000
D)underapplied by $3,000

Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $330,000 ÷ 55,000 direct labor-hours = $6 per direct labor-hour
Overhead over or underapplied
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Question 9

Overapplied manufacturing overhead means that:
A)the applied manufacturing overhead cost was less than the actual manufacturing overhead cost.
B)the applied manufacturing overhead cost was greater than the actual manufacturing overhead cost.
C)the estimated manufacturing overhead cost was less than the actual manufacturing overhead cost.
D)the estimated manufacturing overhead cost was less than the applied manufacturing overhead cost.

Accepted Answer

Overapplied manufacturing overhead occurs when the applied manufacturing overhead cost (which is based on the predetermined overhead rate) is greater than the actual manufacturing overhead cost. This results in a credit balance in the Manufacturing Overhead account.

Question 10

The Work in Process inventory account of a manufacturing Corporation shows a balance of $18,000 at the end of an accounting period.The job cost sheets of the two uncompleted jobs show charges of $6,000 and $3,000 for materials,and charges of $4,000 and $2,000 for direct labor.From this information,it appears that the Corporation is using a predetermined overhead rate,as a percentage of direct labor costs,of:
A)50%
B)200%
C)300%
D)20%

Accepted Answer

The answer of The Work in Process inventory account of...

Question 11

Sirmons Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year.At the beginning of the most recently completed year,the Corporation estimated the labor-hours for the upcoming year at 70,000 labor-hours.The estimated variable manufacturing overhead was $9.93 per labor-hour and the estimated total fixed manufacturing overhead was $1,649,200.The actual labor-hours for the year turned out to be 74,000 labor-hours.The predetermined overhead rate for the recently completed year was closest to:
A)$32.22
B)$9.93
C)$33.49
D)$23.56

Accepted Answer

Estimated total manufacturing overhead = $1,649,200 + ($9.93 per labor-hour × 70,000 labor-hours)= $2,344,300
Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $2,344,300 ÷ 70,000 labor-hours = $33.49 per labor-hour

Question 12

Aksamit Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year.Data for the most recently completed year appear below:  The predetermined overhead rate for the recently completed year was closest to:
A)$23.97
B)$31.00
C)$7.03
D)$31.35

Accepted Answer

Estimated total manufacturing overhead = $1,486,140 + ($7.03 per machine-hour × 62,000 machine-hours)= $1,922,000
Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $1,922,000 ÷ 62,000 machine-hours = $31.00 per machine-hour

Question 13

Galbraith Corporation applies overhead cost to jobs on the basis of 70% of direct labor cost.If Job 201 shows $28,000 of manufacturing overhead applied,the direct labor cost on the job was:
A)$40,000
B)$19,600
C)$28,000
D)$36,400

Accepted Answer

Manufacturing overhead applied = Predetermined overhead rate × Amount of the allocation base incurred
$28,000 = 0.70 × Direct labor cost
Direct labor cost = $28,000 ÷ 0.70 = $40,000

Question 14

Brusveen Corporation applies manufacturing overhead to jobs on the basis of direct labor-hours.The following information relates to Brusveen for last year:  What was Brusveen's underapplied or overapplied overhead for last year?
A)$4,000 underapplied
B)$8,880 underapplied
C)$8,880 overapplied
D)$9,000 underapplied

Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $300,000 ÷ 15,000 direct labor-hours = $20 per direct labor-hour
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Question 15

Clear Colors Corporation uses a predetermined overhead rate based on direct labor costs to apply manufacturing overhead to jobs.At the beginning of the year the Corporation estimated its total manufacturing overhead cost at $350,000 and its direct labor costs at $200,000.The actual overhead cost incurred during the year was $362,000 and the actual direct labor costs incurred on jobs during the year was $208,000.The manufacturing overhead for the year would be:
A)$12,000 underapplied.
B)$12,000 overapplied.
C)$2,000 underapplied.
D)$2,000 overapplieD.Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $350,000 ÷ $200,000 = 1.75

Accepted Answer

The answer of Clear Colors Corporation uses a predetermined overhead...

Question 16

CR Corporation has the following estimated costs for the next year:  CR Corporation estimates that 20,000 labor-hours will be worked during the year.If overhead is applied on the basis of direct labor-hours,the overhead rate per hour will be:
A)$2.25
B)$3.25
C)$3.45
D)$4.70

Accepted Answer

The answer of CR Corporation has the following estimated costs...

Question 17

Bradbeer Corporation uses direct labor-hours in its predetermined overhead rate.At the beginning of the year,the estimated direct labor-hours were 17,500 hours.At the end of the year,actual direct labor-hours for the year were 16,000 hours,the actual manufacturing overhead for the year was $233,000,and manufacturing overhead for the year was underapplied by $15,400.The estimated manufacturing overhead at the beginning of the year used in the predetermined overhead rate must have been:
A)$249,375
B)$217,600
C)$228,000
D)$238,000

Accepted Answer

Underapplied (overapplied)manufacturing overhead = Actual manufacturing overhead - Manufacturing overhead applied
Manufacturing overhead applied = Actual manufacturing overhead - Underapplied manufacturing overhead
= $233,000 - $15,400
= $217,600
Overhead applied = Predetermined overhead rate × Amount of the allocation base incurred
Predetermined overhead rate = Overhead applied ÷ Amount of the allocation base incurred
Predetermined overhead rate = $217,600 ÷ 16,000 direct labor-hours
= $13.60 per direct labor-hour
Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base
Estimated total manufacturing overhead = Predetermined overhead rate × Estimated total amount of the allocation base
= $13.60 per direct labor-hour × 17,500 direct labor-hours
= $238,000

Question 18

Buker Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year.Data for the upcoming year appear below:  The predetermined overhead rate for the recently completed year was closest to:
A)$22.04
B)$29.59
C)$7.67
D)$29.71

Accepted Answer

Estimated total manufacturing overhead = $1,630,960 + ($7.67 per machine-hour × 74,000 machine-hours)= $2,198,540
Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $2,198,540 ÷ 74,000 machine-hours = $29.71 per machine-hour

Question 19

Dagger Corporation uses direct labor-hours in its predetermined overhead rate.At the beginning of the year,the total estimated manufacturing overhead was $423,870.At the end of the year,actual direct labor-hours for the year were 19,400 hours,manufacturing overhead for the year was underapplied by $5,650,and the actual manufacturing overhead was $418,870.The predetermined overhead rate for the year must have been closest to:
A)$21.59
B)$20.76
C)$21.30
D)$21.85

Accepted Answer

Underapplied (overapplied)manufacturing overhead = Actual manufacturing overhead - Manufacturing overhead applied
Manufacturing overhead applied = Actual manufacturing overhead - Underapplied manufacturing overhead
= $418,870 - $5,650
= $413,220
Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $413,220 ÷ 19,400 direct labor-hours = $21.30 per direct labor-hour

Question 20

Cribb Corporation uses direct labor-hours in its predetermined overhead rate.At the beginning of the year,the estimated direct labor-hours were 17,900 hours and the total estimated manufacturing overhead was $341,890.At the end of the year,actual direct labor-hours for the year were 16,700 hours and the actual manufacturing overhead for the year was $336,890.Overhead at the end of the year was:
A)$22,920 underapplied
B)$17,920 overapplied
C)$17,920 underapplied
D)$22,920 overapplied

Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base
= $341,890 ÷ 17,900 direct labor-hours
= $19.10 per direct labor-hour
Overhead applied = Predetermined overhead rate × Amount of the allocation base incurred
= $19.10 per direct labor-hour × 16,700 direct labor-hours
= $318,970
Overhead over or underapplied
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Quiz 2: Job-Order Costing: Calculating Unit Production Costs

Collins Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs.The following information applies to the Corporation for the current year: The manufacturing overhead cost for the current year will be:

The following T-accounts have been constructed from last year's records at C&C Manufacturing: C&C Manufacturing uses job-order costing with a predetermined overhead rate and applies manufacturing overhead to jobs based on direct labor costs.What is the predetermined overhead rate?

On the Schedule of Cost of Goods Manufactured,the final Cost of Goods Manufactured figure represents:

Overapplied manufacturing overhead means that:

Aksamit Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year.Data for the most recently completed year appear below: The predetermined overhead rate for the recently completed year was closest to:

Galbraith Corporation applies overhead cost to jobs on the basis of 70% of direct labor cost.If Job 201 shows $28,000 of manufacturing overhead applied,the direct labor cost on the job was:

Brusveen Corporation applies manufacturing overhead to jobs on the basis of direct labor-hours.The following information relates to Brusveen for last year: What was Brusveen's underapplied or overapplied overhead for last year?

CR Corporation has the following estimated costs for the next year: CR Corporation estimates that 20,000 labor-hours will be worked during the year.If overhead is applied on the basis of direct labor-hours,the overhead rate per hour will be:

Buker Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year.Data for the upcoming year appear below: The predetermined overhead rate for the recently completed year was closest to: