Predetermined Overhead Rates, Overhead Variances, Unit Costs Primera Company produces two products and uses a predetermined...

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Predetermined Overhead Rates, Overhead Variances, Unit Costs Primera Company produces two products and uses a predetermined overhead rate to apply overhead. Primera currently applies overhead using a plantwide rate based on direct labor hours. Consideration is being given to the use of departmental overhead rates where overhead would be applied on the basis of direct labor hours in Department 1 and on the basis of machine hours in Department 2. At the beginning of the year, the following estimates are provided: Department 1 Department 2 Direct labor hours 640,000 128,000 Machine hours 16,000 192,000 Overhead cost $384,000 $1,152,000 Actual results reported by department and product during the year are as follows: Department 1 627,200 Department 2 Direct labor hours 134,400 Machine hours Overhead cost 17,60p $400,000 204,800 $1,232,000 Product 1 Product 2 Direct labor hours Department 1 480,000 147,200 Department 2 96,000 38,400 Machine hours Department 1 8,000 9,600 Department 2 24,800 180,000 Predetermined Overhead Rates, Overhead Variances, Unit Costs Primera Company produces two products and uses a predetermined overhead rate to apply overhead. Primera currently applies overhead using a plantwide rate based on direct labor hours. Consideration is being given to the use of departmental overhead rates where overhead would be applied on the basis of direct labor hours in Department 1 and on the basis of machine hours in Department 2. At the beginning of the year, the following estimates are provided: Department 1 Department 2 Direct labor hours 640,000 128,000 Machine hours 16,000 192,000 Overhead cost $384,000 $1,152,000 Actual results reported by department and product during the year are as follows: Department 1 627,200 Department 2 Direct labor hours 134,400 Machine hours Overhead cost 17,60p $400,000 204,800 $1,232,000 Product 1 Product 2 Direct labor hours Department 1 480,000 147,200 Department 2 96,000 38,400 Machine hours Department 1 8,000 9,600 Department 2 24,800 180,000