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1. $5.50 overhead will be applied to the relevant job for every

hour of direct labor work on that job.Betty Queen Motorboat

Company used 400 direct labor hours (200 hrs for job #257,

150 hrs for job #258, and 50 hrs for job #259). What is the

manufacturing overhead for each job?

Look at our illustration above for direct labor:

With an overhead rate of $5.50 and 400 hours, $2,200 of

manufacturing overhead will be assigned to the

following jobs:

Job #257 200 hrs @ 5.50 = $1,100

Job #258 150 hrs @ 5.50 = $825

Job #259 50 hrs @ 5.50 = $275Total: 400 hrs @5.50 = $2,200

2.A typical entry to record factory overhead costs would be as

follows:

Dr. Factory Overhead ...100,000

Cr. Salaries Payable..................50,000

Cr. Supplies .............................15,000

Cr. Prepaid Insurance ...... ..... ..... ..5,000

Cr. Accumulated Depreciation ....11,000

Cr. Taxes Payable ......................9,000

Cr. Utilities Payable ..................10,000

3.Activity-Based Costing or simply ABC In these highly automated, flexible manufacturing environmen

we need to look at a more refined costing

system so we can achieve a fair and equitable allocation of cost

There is a need for new approaches to

tracing overhead costs. If we can identify the causes of costs by

activities, we can more accurately assign overhead costs based o

the amount of overhead each product truly consumes. This

approach/method has given accountants and managers a bette

understanding of what drives overhead costs.

4. actual overhead costs of $650,000 and the overhead applied

to jobs amounted to $680,000. That means we over-applied

the overhead costs by $30,000. The over-applied overhead

cost is credited to?

Cost of Goods Sold, reducing it.

5. d ABC is a costing technique that uses a two-stage allocation

process:1. The first stage identifies activities and assigns the overhead

costs on the basis of activities that

have consumed resources;

2. In the second stage, costs are allocated from each activity-co

pool to each product line in

proportion to the amount of products consumed by the product

line.

6. d indirect cost are allocated derectely to the cost object by 1)

Traditional Coasting or 2) Active Based Costing

Consept of active-based-costing

Stage 1: Overheads are assigned to activities (costs are first

pooled according to activities, and than activei cost driver ratesStage 2: Products Charge with Cost of activities

Ex 1. Activity-Based Costing = Set up cost; Cost Drive = No. of s

ups; Cost Driver Rate = Set up cost/No. of Set ups

Ex. 2. Active Cost Pool = Ordering Cost; Cost Drive = No. of

orders; Cost Driver Rate = Ordering Cost/No. of orders

Important to keep in mind that overhead cost are increasing da

by day wereas ABC costing is becoming more relevant.

(3 of 8) Allocation of Manufacturing Overhead CostsStudy online at quizlet.com/_53xdi

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15. Suppose a company had $52,000 of actual overhead and

applied $50,000 to jobs using a predetermined overhead

rate. In this case, overhead is?

Is under-applied by $2,000, represented by the debit balance in the

Manufacturing Overhead account. Under-applied overhead is

charged to Cost of Goods Sold [if the amount

is immaterial (relatively small)]. The following journal entry is

made:

Dr Cost of Goods Sold $2,000.00

Cr Manufacturing Overhead $2,000.00