Determine the estimated direct labor, Accounting Basics

Assignment Help:

1. Shaving 5% of the estimated direct labor hours in the predetermined overhead rate will result a high overhead rate, which would likely result a high credit balance of overapplied overhead for the year. When managers increased the amount of direct labor hours, there is a likely related increase of factory supervisors, the factory space to be maintained, and factory supplied and utilities consumed which results to more actual cost. Thus there is a high degree of correlation between the quantity of direct labor used and the amount of manufacture overhead used. However, with the technology of machines which leads to machine hours, direct labor being reduced and manufacturing overhead increasing, the correlation between direct labor and manufacturing overhead began to wane. Therefore we see a cumulative effect of overapplying overhead all recognized in December when Manufacture Overhead is closed out of the cost of good sold. If we constantly close the balance every month or every quarter, overtime the balance would get smaller and smaller over the course of the year.

2. The question if Cristin Madsen should go along with the general manager's request really depends who she is working for. She may work for the general manager of the division or the corporate controller who may not necessarily know the outcome of shaving 5% of the estimated direct labor. It also seems out of the ordinary to Cristin of eliminating a "Christmas bonus" be such a bad idea. However, it's not for Cristin to decide.


Related Discussions:- Determine the estimated direct labor

Hello, Hello, I'm having trouble understanding Direct Cost, Overhead Cost a...

Hello, I'm having trouble understanding Direct Cost, Overhead Cost and Indirect Cost. ***Also Period cost and Product cost. please can anyone explain it and give examples for eac

Non-compliance, Elaborate the consequences of non-compliance of each of the...

Elaborate the consequences of non-compliance of each of the accounting concepts.

Explain user account control in windows vista, User account control is mean...

User account control is meant to allow users to run with standard user rights, as opposed to administrative rights. Administrative rights provide users the ability to read and chan

Illustrate the financial accounting process, Q. Illustrate the Financial ac...

Q. Illustrate the Financial accounting process? In this section we describe the accounting equation as the framework for the entire accounting process. Then we demonstrate you

What is the gross income from the distribution?, Zack is a farmer who buys ...

Zack is a farmer who buys his feed and fertilizer from a farmer cooperative. In 2012, Zack purchased $300,000 in feed and fertilizer for the farm and $10,000 of household goods. Be

Describe about post-closing trial balance, Q. Describe about post-closing t...

Q. Describe about post-closing trial balance? A post-closing trial balance is trial balances taken subsequent to the closing entries have been posted. The only accounts that mu

Procedure of recording business transactions, Q. Procedure of recording bus...

Q. Procedure of recording business transactions? The raw information of accounting is the business transactions. We documented the transactions in section 1 as increases or dec

How to enter this transaction in books of accounts?, My company has done a ...

My company has done a down payment on inventory ,then manufacturer will ship this order between 30 to 60 days after original payment and the balance is due 60 days once the order g

Briefly explain the functions of accounting, Question 1 Briefly explain th...

Question 1 Briefly explain the functions of accounting Question 2 Explain the three branches of accounting Question 3 What is single entry system? What are the advantages and

Describe in brief about the wholesalers, Describe in brief about the Wholes...

Describe in brief about the Wholesalers They buy goods in bulk from manufacturers and sell them to retailers, other schools, wholesalers and other non-profit institutions, and

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd