Exam 6: The Predetermined Overhead Rate and Capacity

If the company bases its predetermined overhead rate on the estimated amount of the allocation base for the upcoming year the amount of manufacturing overhead charged to the Job B04D is closest to:

The management of Chaloux Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The Corporation's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours. If the Corporation bases its predetermined overhead rate on capacity, by how much was manufacturing overhead underapplied or overapplied?

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?

If the company bases its predetermined overhead rate on the estimated amount of the allocation base for the upcoming year, the predetermined overhead rate is closest to:

If predetermined overhead rates are based on budgeted activity and overhead includes significant fixed costs, then the unit product costs will be stable regardless of the budgeted level of activity for the period.

If the company bases its predetermined overhead rate on the estimated amount of the allocation base for the upcoming year, the predetermined overhead rate is closest to:

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

When the predetermined overhead rate is based on the level of activity at capacity, underapplied manufacturing overhead may be called the Cost of Unused Capacity and treated as a period expense.

The management of Del Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year. 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 37,000 machine-hours. In addition, capacity is 44,000 machine-hours and the actual activity for the year is 40,100 machine-hours. All of the manufacturing overhead is fixed and is $634,920 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 and the actual amount of manufacturing overhead for the year. Required: Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the amount of the allocation base at capacity. Predetermined overhead rate = Estimated total manufacturing overhead at capacity ÷ Estimated total amount of the allocation base at capacity = $634,920 ÷ 44,000 MHs = $14.43 per MH

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?

The management of Shastri Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year. 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 69,000 machine-hours. In addition, capacity is 76,000 machine-hours and the actual activity for the year is 71,600 machine-hours. All of the manufacturing overhead is fixed and is $3,461,040 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 and the actual amount of manufacturing overhead for the year. Job Z67J, which required 330 machine-hours, is one of the jobs worked on during the year. Required: a. Determine the predetermined overhead rate if the predetermined overhead rate is based on the estimated amount of the allocation base. b. Determine how much overhead would be applied to Job Z67J if the predetermined overhead rate is based on estimated amount of the allocation base. c. Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the estimated amount of the allocation base. d. Determine the predetermined overhead rate if the predetermined overhead rate is based on the amount of the allocation base at capacity. e. Determine how much overhead would be applied to Job Z67J if the predetermined overhead rate is based on the amount of the allocation base at capacity. f. Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the amount of the allocation base at capacity.

The management of Digges Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The Corporation'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 51,000 machine-hours. In addition, capacity is 63,000 machine-hours and the actual level of activity for the year is 53,300 machine-hours. All of the manufacturing overhead is fixed and is $1,702,890 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 Corporation bases its predetermined overhead rate on capacity, by how much was manufacturing overhead underapplied or overapplied?

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

The management of Westrope Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year. 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 76,000 machine-hours. In addition, capacity is 86,000 machine-hours and the actual activity for the year is 71,000 machine-hours. All of the manufacturing overhead is fixed and is $4,771,280 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 and the actual amount of manufacturing overhead for the year. Required: a. Determine the predetermined overhead rate if the predetermined overhead rate is based on the estimated amount of the allocation base. b. Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the estimated amount of the allocation base. c. Determine the predetermined overhead rate if the predetermined overhead rate is based on the amount of the allocation base at capacity. d. Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the amount of the allocation base at capacity.

The management of Hannan Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year. 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 12,000 machine-hours. In addition, capacity is 15,000 machine-hours and the actual activity for the year is 12,100 machine-hours. All of the manufacturing overhead is fixed and is $21,600 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 and the actual amount of manufacturing overhead for the year. Required: a. Determine the predetermined overhead rate if the predetermined overhead rate is based on the amount of the allocation base at capacity. b. Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the amount of the allocation base at capacity.

If the company bases its predetermined overhead rate on capacity, by how much was manufacturing overhead underapplied or overapplied?

If the company bases its predetermined overhead rate on capacity, by how much was manufacturing overhead underapplied or overapplied?

If the company bases its predetermined overhead rate on capacity, by how much was manufacturing overhead underapplied or overapplied?

If the predetermined overhead rate on is based on the level of activity at capacity, then products will be charged only for the capacity that they use and will not be charged for the capacity they don't use.

If the company bases its predetermined overhead rate on capacity, by how much was manufacturing overhead underapplied or overapplied?