Valtec Company has three manufacturing divisions (listed below). Each division has its own job order costing system
Question:
Valtec Company has three manufacturing divisions (listed below). Each division has its own job order costing system and forecasts the following manufacturing costs for the upcoming year:
The predetermined overhead rates for each division are based on the following:
Wayne Division: Machine hours
Monroe Division: Materials to be used
Yates Division: Direct labor hours
1. Compute the predetermined overhead rate to be used by each division.
2. If the Wayne Division actually had 37,000 machine hours and $49,000 of manufacturing overhead, will overhead be over- or under-applied and by how much?
3. If the Monroe Division used 95,000 pounds of materials, what will be the applied manufacturing overhead?
4. Interpretive Question: Of the two commonly used methods to dispose of over- or under-applied manufacturing overhead, which method would you recommend andwhy?
Step by Step Answer:
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain