Chapter 2 Problem Session Activity

Assume that a company’s total estimated fixed overhead cost for the coming year is $300,000 and its estimated variable overhead cost is $6 per direct labor-hour. If the company estimates that it will work 75,000 direct labor hours in the coming year, what is its predetermined overhead rate per direct labor hour?

• $3.00

• $7.50

• $4.25

• $10.00

Excela Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $220,000, variable manufacturing overhead of $3.40 per machine-hour, and 35,000 machine-hours. The estimated total manufacturing overhead is closest to:

• $339,000

• $220,000

• $675,000

• $110,000

Porter Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs. The manufacturing overhead for the year are 120% of direct labor cost for Department A and 50% of direct labor cost for Department B. What was the total manufacturing cost assigned to Job 419?

• $300,400

• $275,333

• $235,000

• $230,000

When is predetermined overhead rate calculated...

• Before the period begins

• As soon as actual overhead is known

• As the period progresses

• After the period is over

Casper Corporation is using a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $482,000 and 20,000 machine-hours for the period. The company incurred actual total fixed manufacturing overhead of $520,000 and 30,300 total machine-hours during the period. The amount of manufacturing overhead that would have been applied to all jobs during the period is closest to: (Round your intermediate calculations to 2 decimal places.)

• $938,300

• $657,340

• $847,050

• $730,230

Sophie Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data:

Total Machine Hours: 80,000

Total Fixed Manufacturing overhead cost: $284,000

Variable Manufacturing Overhead per machine-hour: $2.80

What is the estimated total manufacturing overhead?

• $505,000

• $508,000

• $593,000

• $532,000

Which of the following is the predetermined overhead rate formula?

• Predetermined overhead rate = Actual total manufacturing overhead cost ÷ Estimated total amount of the allocation base

• Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base

• Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Actual total amount of the allocation base

• Predetermined overhead rate = Estimated total variable costs ÷ Estimated total amount of the allocation base

Purves Corporation is using a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $132,000 and 18,000 direct labor-hours for the period. The company incurred actual total fixed manufacturing overhead of $113,000 and 10,900 total direct labor-hours during the period. The predetermined overhead rate is closest to:

• $6.00 per direct labor-hour
• $8.50 per direct labor-hour
• $5.75 per direct labor-hour
• $7.33 per direct labor-hour

Applied overhead is calculated by multiplying the POHR by the actual units of the allocation base incurred by the job

• True

• False

Tula Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year. Tula estimates that 27,500 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be:

• $2.50 per direct labor-hour

• $2.00 per direct labor-hour

• $2.75 per direct labor-hour

• $2.80 per direct labor-hour