Cool Vision Inc. produces polarized sunglasses. During the most recent period, Cool Vision incurred the following costs (amounts are in thousands):
Required:
a. Complete the above table by classifying each cost as either a product cost or a period cost; for costs classified as product costs, further classify as a direct or an indirect costs.
b. Calculate total direct costs and total indirect (MOH) costs.
c. Assume Cool Vision used a budgeted MOH rate to apply MOH costs this year of $400,000.
How much did the company underapply or overapply for its MOH costs? How could this difference happen?

Question

Cool Vision Inc. produces polarized sunglasses. During the most recent period, Cool Vision incurred the following costs (amounts are in thousands):
  Required:
a. Complete the above table by classifying each cost as either a product cost or a period cost; for costs classified as product costs, further classify as a direct or an indirect costs.
b. Calculate total direct costs and total indirect (MOH) costs.
c. Assume Cool Vision used a budgeted MOH rate to apply MOH costs this year of $400,000.
How much did the company underapply or overapply for its MOH costs? How could this difference happen?

Quizplus · Accepted Answer

The Answer of Cool Vision Inc. produces polarized sunglasses. During the most recent period, Cool Vision incurred the following costs (amounts are in thousands):
  Required:
a. Complete the above table by classifying each cost as either a product cost or a period cost; for costs classified as product costs, further classify as a direct or an indirect costs.
b. Calculate total direct costs and total indirect (MOH) costs.
c. Assume Cool Vision used a budgeted MOH rate to apply MOH costs this year of $400,000.
How much did the company underapply or overapply for its MOH costs? How could this difference happen?