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The P Company applies overhead costs to jobs using machine hours as the allocation base. At the beginning of the year, 2014, the company estimated manufacturing overhead costs to be $1,400,000 and estimated total machine hours (the expected volume) to be 56,000 hours. During the year many jobs were completed. One job, Job #125 was completed and had the following data: total direct material costs were $2,500, total direct labor costs were $3,250, and actual machine hours worked on the job totaled 75 hours. At the end of 2014, the corporate controller determined that total actual overhead costs incurred for all jobs totaled $1,450,000 and the actual machine hours incurred during 2014 for all jobs totaled 58,400 hours. Given this data, answer the following questions with supporting computations. Required: a. Compute the predetermined overhead rate for 2014. Be sure to include a proper label. b. If 25 units were made in Job #1275, determine the total cost of the job and the cost per unit. c. Determine the total amount of overhead that was Under- or Over-Applied for the year 2014. Be sure to specifically state whether the amount you determined is UNDER or OVER-APPLIED overhead. d. If the entire overhead variance is closed to cost of goods sold, what is the effect on gross profit and net operating income? e. If the company had used CAPACITY (normal) volumes, which are greater than the expected volumes used above, to determine the predetermined overhead rate, what would be the likely impact on the following items: 1) the predetermined overhead rate, 2) the amount of overhead applied to jobs, and 3) the resulting over/under applied computations?
According to the liquidity premium theory of interest rates, long-term spot rates are higher than the average of current and expected future short-term rates. Investors are indifferent between different maturities if the long-term spot rates are equa..
Figurate Industries has 750,000 shares of cumulative preferred stock outstanding. It has passed the last three quarterly dividends of $2.50 per share and now (at the end of the current quarter) wishes to distribute a total of $12 million to its share..
Suppose you plan to borrow $10000 from the bank and have two options to pay back: What is EAR implied in each option? Which one do you prefer and explain why?
The earnings, dividends, and common stock price of Shelby Inc. are expected to grow at 5% per year in the future. Shelby's common stock sells for $29.50 per share, its last dividend was $1.80, and the company will pay a dividend of $1.89 at the end o..
Distinguish between an open-end fund and a closed-end fund.
For the past three years, Wayne has been the sole owner and CEO of a corp that manufactures and distributes a relatively expensive high-tech baby monitoring device known as "Hear All." The business has grown steadily, and Wayne is convinced that it's..
What conditions will one observe floating exchange rates operating in the gold standard system and explain why the expectation of inflation in country A will lead to a higher nominal rate of interest on securities denominated in A'S currency, but h..
Who will benefit most from the machine if the technology underlying the machine is not proprietary and what are some of the things the manufacturer can do to earn higher returns from this machine even without patent protection?
A $1000 bond with semi-annual coupons, with coupon rate of 6% per annum convertible semi-annually, matures at par on October 15th, 2020. The bond is purchased on June 28th, 2005 to yield the investor a nominal rate of 7% per annum convertible semi-an..
In 1895, the first U.S. Open Golf Championship was held. The winner’s prize money was $150. In 2010, the winner’s check was $1,350,000. What was the percentage increase per year in the winner’s check over this period? (Do not round intermediate calcu..
In November 2006, Citi groups stock (NYSE:C) was trading at $49.59. Following the credit crisis on 2007-2008 and by at the end of October 2009, Citigroup stock price has plummeted to $4,27 Several banks went under, and the other saw their stock price..
Write a one page memo that critiques the short-term finance policy of each company and explain which company has the better short-term finance policy. Justify your response.
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