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Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
Edition 2ISBN: 978-0077274993Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
Edition 2ISBN: 978-0077274993 Exercise 9
Cost Estimation, Deriving Overhead Rates
Ipanema Pen Company manufactures office supplies such as paper clips and staples. It runs large batches of any one single product and uses a normal job costing system. Manufacturing overhead is assigned to batches by a predetermined rate on the basis of direct labor-hours. The company incurred manufacturing overhead costs during two recent years (adjusted for price-level changes using current prices and wage rates) as follows:
Required
Using the data from the two recent years, write a report to management that shows the fixed and variable overhead rates used to assign manufacturing overhead to its products. Ipanema Pen expects to operate at a level of 115,000 direct labor-hours in year 6.
Ipanema Pen Company manufactures office supplies such as paper clips and staples. It runs large batches of any one single product and uses a normal job costing system. Manufacturing overhead is assigned to batches by a predetermined rate on the basis of direct labor-hours. The company incurred manufacturing overhead costs during two recent years (adjusted for price-level changes using current prices and wage rates) as follows:
Required
Using the data from the two recent years, write a report to management that shows the fixed and variable overhead rates used to assign manufacturing overhead to its products. Ipanema Pen expects to operate at a level of 115,000 direct labor-hours in year 6.
Explanation
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Verified
From the data given for the 2 years we c...
Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
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