Managerial Accounting Chapter 3

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Chapter 3 Assignment

Exercise 3-1

Logan Products computes its predetermined overhead rate annually on the basis of direct labor hours. At the beginning of the year, it estimated that 40,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $466,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $3.00 per direct labor-hour. Logan’s actual manufacturing overhead for the year was $713,400 and its actual total direct labor was 41,000 hours.

Compute the predetermined overhead rate for the year:

Y = a + bx

Y = $466,000 + ($3.00 x 40,000)

Y = $466,000 + $120,000

Y = $586,000 estimated manufacturing overhead

Predetermined overhead rate = estimated manufacturing overhead / estimated allocation base

POR = $586,000 / 40,000

POR = $14.65 per direct labor-hour

Exercise 3-2

Westan Corporation uses a predetermined overhead rate of $23.10 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $277,200 of total manufacturing overhead for an estimated activity level of 12,000 direct labor-hours.

The company incurred actual total manufacturing overhead costs of $266,000 and 12,600 total direct labor-hours during the period.

Determine the amount of manufacturing overhead that would have been applied to all jobs during the period:

Manufacturing overhead applied = Predetermined overhead x Actual direct labor-hours

Manufacturing overhead applied = $23.10 x 12,600

Manufacturing overhead applied = $291,060

Exercise 3-3

Weaver Company's predetermined overhead rate is $18.00 per direct labor-hour and its direct labor wage rate is $12.00 per hour. The following information pertains to job A-200:

Direct materials……………… $200

Direct labor……………………. $120

1. What is the total manufacturing cost assigned to job A-200?

Total manufacturing cost = Direct materials + Direct labor +...

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