Compute the predetermined overhead rate

Reference no: EM13165262

Stanley Printing Company began operation in March with three custom orders. The following costs were incurred during the month.

Direct Materials: Direct Labor:

Job A1 $950 Job A1 $ 2,450
Job A2 750 Job A2 1,950
Job A3 500 Job A3 900
Manufacturing Overhead:
Applied at the rate of 110% of direct labor dollars Actual Manufacturing Overhead incurred: $6,100

Jobs A1 and A2 were completed and sold during March. Job A3 was incomplete at the end of the month. Selling prices were as follows: Job A1, $9,400, and Job A2, $6,900.

a. Record the entries for all costs and revenues in T accounts.
b. Verify the ending balance in the Work in Process Inventory account.
c. Determine the amount of underapplied manufacturing overhead for March and transfer it to Cost of Goods Sold.

2. Swannworth Inc., expects its overhead costs for the coming fiscal period to be $78,300. Total direct labor charges should be 3,000 hours at $10 per hour plus 900 hours at $l5 per hour.

a. Compute the predetermined overhead rate, using direct labor dollars as the allocation base.

b. Ignoring the information given above, consider the following data, which are provided in anticipation of the coming accounting period. Using these data, prepare a schedule to determine the cost of one unit of product.

1. One unit of product requires .50 unit of material X, which costs $30 per unit, and 2 units of material Y, which costs $12 per unit.

2. One year's interest on a loan for the office building leasehold improvements amounts to $6,400.

3. 80,000 units of sales are planned at $99 per unit.

4. One unit of product requires 1.5 hours of direct labor at $10 per hour plus .5 hour of direct labor at $15 per hour.

5. Administrative salaries should amount of $116,000 for the coming fiscal period.

The predetermined overhead rate is 110% of direct labor dollars

Reference no: EM13165262

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