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3 years ago

EB7.

Business

1 answer:

sesenic [268]3 years ago

8 0

Question:

EB7.

LO 6.3Rocks Industries has two products. They manufactured 12,539 units of product A and 8,254 units of product B. The data are:

Cost Pool Estimated Overhead Product A Product B

1 $32,400 1,500 3,000

2 $54,900 1,700 1,300

3 $51,385 1,390 1,000

What is the activity rate for each cost pool?

Answer:

Following two steps helps in finding the Activity Rate for each cost pool.

Step 1: Identify cost pools and their relevant cost drivers.

Cost Driver Estimated Overhead Product A Product B Total

1 $32,400 1,500 3,000 4,500

2 $54,900 1,700 1,300 3,000

3 $51,385 1,390 1,000 2,390

Step 2: Calculate Overhead rate for each activity

Overhead Rate= Cost pool / total units of relevant cost driver consumed

Now just put the values in the formula and compute overhead rate for each activity.

Overhead Rate for Cost Driver 1=$32,400 / 4,500 = $12.5 per cost driver 1

Overhead Rate for Cost Driver 2=$54,900 / 3,000 = $15.5 per cost driver 2

Overhead Rate for Cost Driver 3=$51,385 / 2,390 = $3.5 per cost driver 3

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c. Journal Entries:

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Application of overhead to production for August:

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Factory overhead accounts:

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Actual overhead costs $1,515,800 $3,606,300

Applied overhead costs $1,491,885 $3,696,000

Under/(Over)-Applied $23,915 $89,700 Overapplied

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Answer:

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Answer:

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