Find out overhead application rate, Cost Accounting

Find Out Overhead Application Rate

The given is the budget of Superb Engineering Works for the 2002 year

Factory overheads

Kshs 62,000

Direct labour cost

Kshs 98,000

Direct labour hours

155,000

Machine hours           

50,000

Actual labour hours were

40,000

Actual machine hours were

30,000

Actual direct labour costs were

         Kshs   50,000

Actual direct material costs were

Kshs 45,000

Required

a) Find out the overhead application rate on the basis of

i. Direct labour hours

ii. Overhead costs

iii. Machine hours, and

iv. Direct labour cost

v. Production cost

Solution

i. Direct labour hours method

Overhead application rate (OAR) = 62,000/15,500

= Shs.0.4/labour hour

ii. Direct labour cost method

OAR = (62,000/98,000) * 100

= 63.27 percent

iii. Machine hour method

OAR = (62,000/50,000) * 100

Shs.1.24/machine hour

b) Overhead costs utilizing

i. Direct labour hours = 0.4 x 40000 = Shs 16000

ii. Direct labour cost = 63.27% x 50000 = Shs 31630

iii. Machine hours = 30,000 x 1.24 = Shs 37200

c) Production cost utilizing each of the methods

 

Prime cost

Overheads

Total cost

Cost/unit

i. Direct labour hours

95,000

16,000

111,000

111.00

ii. Direct labour cost

95,000

31,630

126,630

126.63

iii. Machine hours      

95,000

37,200

132,200

132.20

 

Posted Date: 2/5/2013 7:25:11 AM | Location : United States







Related Discussions:- Find out overhead application rate, Assignment Help, Ask Question on Find out overhead application rate, Get Answer, Expert's Help, Find out overhead application rate Discussions

Write discussion on Find out overhead application rate
Your posts are moderated
Related Questions
Identify and explain many classification of costs for planning, control, performance evaluation and decision making.

Required Ledgers in Financial System In the financial Systems the Required ledgers are as: The General Ledger Debtors Ledger Creditors Ledger

sabonis consmetics co. purchased machinery on december 31,2011, paying $50,000 down and agreeing to pay the balance in four equal installments of $40,000 payable each dec 31. an as

Participation - Behavioural Aspects of Standards It has already been pointed out in the previous paragraph such standard costing systems would be more acceptable whether the e

You perform a travel cost study that looks at the relationship between the cost of visiting a lake (including costs of travel, value of time spent not working & any entry fees), it

Marvin's Motors Company (MMC) manufactures outboard motors for use on small to medium sized boats. MMC produces three models: the Standard, the Deluxe and the Performance. The comp

Account Analysis Method of Cost Estimation By Utilizing account analysis, the accountant classifies and examines each ledger account like variable mixed or fixed. Into their v

Hello, I''m currently doing a research on a company and planning an Activity Based Costing system since the company is using Traditional Costing system to allocate the overhead to

This coursework is intended to help you develop your understanding of shell scripting in both a Windows and Unix environment. You should undertake this coursework in groups cons

The following information is provided to you concerning Lydia Ltd as at 30 June 2012.  Assume a company tax rate of 30%. (i) The balance of rent received in advance in the balan