Question: Cirrus Logic is trying to decide on an allocation base to use to assign manufacturing overhead to jobs. The company has always used direct labor
Cirrus Logic is trying to decide on an allocation base to use to assign manufacturing
overhead to jobs. The company has always used
direct labor hours to assign manufacturing overhead to products, but it is trying to
decide whether it should use a different allocation base such as
direct labor dollars or machine hours.
Actual and estimated data for manufacturing overhead, direct labor cost, direct labor
hours, and machine hours for the most recent fiscal year are
summarized here:
Based on the company's current allocation base direct labor hours compute the
following:
a Predetermined overhead rate.
b Applied manufacturing overhead.
c Over or underapplied manufacturing overhead.
If the company had used direct labor dollars instead of direct labor hours as its
allocation base, compute the following:
a Predetermined overhead rate.
b Applied manufacturing overhead.
c Over or underapplied manufacturing overhead.
If the company had used machine hours instead of direct labor hours as its
allocation base, compute the following:
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