Question 1

Predetermined overhead rates are based on actual cost and activity data.

Accepted Answer

A) True 
 B)False

Question 2

The management of Haigler Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity.The company's controller has provided an example to illustrate how this new system would work.In this example,the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 64,000 machine-hours.In addition,capacity is 80,000 machine-hours and the actual level of activity for the year is 66,300 machine-hours.All of the manufacturing overhead is fixed and is $3,788,800 per year.For simplicity,it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity.It is further assumed that this is also the actual amount of manufacturing overhead for the year.
-If the company bases its predetermined overhead rate on capacity,by how much was manufacturing overhead underapplied or overapplied?

Accepted Answer

A) $648,832 Underapplied 
B) $136,160 Underapplied 
C) $648,832 Overapplied 
D) $136,160 Overapplied 
A) $648,832 Underapplied 
B) $136,160 Underapplied 
C) $648,832 Overapplied 
D) $136,160 Overapplied

Question 3

The management of Haigler Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity.The company's controller has provided an example to illustrate how this new system would work.In this example,the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 64,000 machine-hours.In addition,capacity is 80,000 machine-hours and the actual level of activity for the year is 66,300 machine-hours.All of the manufacturing overhead is fixed and is $3,788,800 per year.For simplicity,it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity.It is further assumed that this is also the actual amount of manufacturing overhead for the year.
-If the company bases its predetermined overhead rate on capacity,the predetermined overhead rate is closest to:

Accepted Answer

A) $47.36 
B) $53.82 
C) $59.20 
D) $57.15 
A) $47.36 
B) $53.82 
C) $59.20 
D) $57.15

Question 4

The management of Pundt Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity.The company's controller has provided an example to illustrate how this new system would work.In this example,the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 15,000 machine-hours.In addition,capacity is 19,000 machine-hours and the actual level of activity for the year is 15,100 machine-hours.All of the manufacturing overhead is fixed and is $45,600 per year.For simplicity,it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity.It is further assumed that this is also the actual amount of manufacturing overhead for the year.A number of jobs were worked on during the year,one of which was Job K41P.This job required 140 machine-hours.
-If the company bases its predetermined overhead rate on capacity,by how much was manufacturing overhead underapplied or overapplied?

Accepted Answer

A) $304 Overapplied 
B) $9,360 Underapplied 
C) $9,360 Overapplied 
D) $304 Underapplied 
A) $304 Overapplied 
B) $9,360 Underapplied 
C) $9,360 Overapplied 
D) $304 Underapplied

Question 5

If the company bases its predetermined overhead rate on capacity,the predetermined overhead rate is closest to:

Accepted Answer

A) $32.45 
B) $27.50 
C) $30.44 
D) $30.38 
A) $32.45 
B) $27.50 
C) $30.44 
D) $30.38

Question 6

The management of Haigler Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity.The company's controller has provided an example to illustrate how this new system would work.In this example,the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 64,000 machine-hours.In addition,capacity is 80,000 machine-hours and the actual level of activity for the year is 66,300 machine-hours.All of the manufacturing overhead is fixed and is $3,788,800 per year.For simplicity,it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity.It is further assumed that this is also the actual amount of manufacturing overhead for the year.
-If the company bases its predetermined overhead rate on the estimated amount of the allocation base for the upcoming year,by how much was manufacturing overhead underapplied or overapplied?

Accepted Answer

A) $648,832 Overapplied 
B) $648,832 Underapplied 
C) $136,160 Overapplied 
D) $136,160 Underapplied 
A) $648,832 Overapplied 
B) $648,832 Underapplied 
C) $136,160 Overapplied 
D) $136,160 Underapplied

Question 7

The management of Crapser Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity.The company's controller has provided an example to illustrate how this new system would work.In this example,the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 58,000 machine-hours.In addition,capacity is 67,000 machine-hours and the actual level of activity for the year is 59,000 machine-hours.All of the manufacturing overhead is fixed and is $2,098,440 per year.For simplicity,it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity.It is further assumed that this is also the actual amount of manufacturing overhead for the year.
-If the company bases its predetermined overhead rate on the estimated amount of the allocation base for the upcoming year,by how much was manufacturing overhead underapplied or overapplied?

Accepted Answer

A) $36,180 Overapplied 
B) $250,560 Overapplied 
C) $36,180 Underapplied 
D) $250,560 Underapplied 
A) $36,180 Overapplied 
B) $250,560 Overapplied 
C) $36,180 Underapplied 
D) $250,560 Underapplied

Question 8

Use of a single,plantwide overhead rate is generally appropriate only for very large manufacturing companies.

Accepted Answer

A) True 
 B)False

Predetermined overhead rates are based on actual cost and activity data.

If the company bases its predetermined overhead rate on capacity,the predetermined overhead rate is closest to:

Use of a single,plantwide overhead rate is generally appropriate only for very large manufacturing companies.

Statement of Cash Flows

Further Classification of Labor Costs

Cost of Quality

Least-Squares Regression Computations

Absorption Costing and Variable Costing

Abc Action Analysis

Use Activity-Based Costing Technique to Compute Product Costs for External Reports

Fifo Method

Compute and Interpret the Fixed Overhead Variances

Journal Entries to Record Variances

Transfer Pricing

The Concept of Present Value

Income Taxes in Capital Budgeting Decisions

Pricing Products and Services

Profitability Analysis

Filters

Exam 1: Absorption Costing and Variable Costing

Predetermined overhead rates are based on actual cost and activity data.

If the company bases its predetermined overhead rate on capacity,the predetermined overhead rate is closest to:

Use of a single,plantwide overhead rate is generally appropriate only for very large manufacturing companies.

Statement of Cash Flows

Further Classification of Labor Costs

Cost of Quality

Least-Squares Regression Computations

Absorption Costing and Variable Costing

Abc Action Analysis

Use Activity-Based Costing Technique to Compute Product Costs for External Reports

Fifo Method

Compute and Interpret the Fixed Overhead Variances

Journal Entries to Record Variances

Transfer Pricing

The Concept of Present Value

Income Taxes in Capital Budgeting Decisions

Pricing Products and Services

Profitability Analysis

Filters