Question

The following information pertains to Paramus Metal Works for the year just ended.
Budgeted direct-labor cost: 77,000 hours (practical capacity) at $17 per hour
Actual direct-labor cost: 79,000 hours at $18 per hour
Budgeted manufacturing overhead: $993,300
Budgeted selling and administrative expenses: $417,000
Actual manufacturing overhead:
Depreciation.......................................................................... $225,000
Property taxes......................................................................... 19,000
Indirect labor........................................................................... 79,000
Supervisory salaries.................................................................210,000
Utilities.................................................................................... 58,000
Insurance................................................................................. 32,000
Rental of space.......................................................................295,000
Indirect material (see data below........................................... 79,000
Indirect material:
Beginning inventory, January 1............................................. 46,000
Purchases during the year..................................................... 95,000
Ending inventory, December 31........................................... 62,000

Required:
1. Compute the firm’s predetermined overhead rate, which is based on direct-labor hours.
2. Calculate the overapplied or underapplied overhead for the year.
3. Prepare a journal entry to close out the Manufacturing Overhead account into Cost of Goods Sold.
4. Build a spreadsheet: Construct an Excel spreadsheet to solve requirements (1) and (2) above. Show how the solution will change if the following data change: budgeted manufacturing overhead was $990,000, property taxes were $25,000, and purchases of indirect material amounted to $97,000.



$1.99
Sales2
Views324
Comments0
  • CreatedApril 22, 2014
  • Files Included
Post your question
5000