82) The FSR Company uses a budgeted factory overhead rate to apply manufacturing overhead to production.  The rate is based on direct labour hours.  Estimates for the year 2006 are given below:

Estimated manufacturing overhead$500,000

Estimated direct labour hours50,000

During 2006 the Paine Company used 60,000 direct labour hours.  At the end of 2006, the company’s records revealed the following information:

Raw materials inventory$ 40,000

Work-in-process inventory100,000

Finished goods inventory200,000

Cost of goods sold700,000

Manufacturing overhead510,000

a. Calculate the budgeted overhead rate for 2006.

b. Determine the amount of underapplied or overapplied overhead for 2006.

c. If underapplied or overapplied overhead is treated as an adjustment to cost of goods sold, determine the cost of goods sold that would appear on the company’s income statement.

83) Truss Inc. has two producing departments:  assembly and finishing. The company has been using a plant-wide predetermined overhead rate based on direct labour cost. The following estimates were made for the current year:


Manufacturing overhead$240,000$160,000$400,000

Direct labour cost$300,000$500,000$800,000

Machine hours15,00010,00025,000

a. Calculate a budgeted factory overhead rate for the current year based on direct labour cost.

b. Calculate separate departmental overhead rates based upon direct labour cost for assembly and machine hours for finishing.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *