All categories

3 years ago

LO 4.4How is the predetermined overhead rate applied?

Business

1 answer:

soldier1979 [14.2K]3 years ago

4 0

Answer:

Please see explanation.

Explanation:

Once the factory overhead rate is determined using the estimated amount of factory overhead and estimated base, it is used to charge overhead cost to the jobs, products or work performed.

Since, not all overhead costs are known at the time of making the product, (such as electricity bill is received after the month end) therefore, the estimated rate is used to apply the overhead cost to the job or product using actual activity level. This is called absorption or application of overheads to the products / jobs.

Due to this, at each period end, the management calculates and compares the actual overhead cost with the applied overhead cost and determine the over or under applied overheads.

You might be interested in

In your company's management development program, there was a heated discussion between

GREYUIT [131]

Answer:

The most sensible position is to understand that theory, while not practical in itself, can be immensely helpful when dealing with pratical matters.

This is because theory gives you a sound conceptual foundation that can be used to analyze the practical context, and approach it with the best possible practical solutions.

Without theory, managers have to rely too much on intuition, which can often fail.

3 0

3 years ago

On October 1, 2018, Swifty Company places a new asset into service. The cost of the asset is $125000 with an estimated 5-year li

Novosadov [1.4K]

Answer:

The book value of the plant asset on the December 31, 2018 is $75,000.

Explanation:

Determine the depreciable cost,

The depreciable cost = Acquisition cost - Salvage value.

The depreciable cost = 125,000 - 30,500.

The depreciable cost = $94,500.

Determine the annual depreciation expense,

The annual depreciation expense = depreciable cost/useful life

The annual depreciation expense = 94,000/5

The annual depreciation expense = $18,900.

Find the % rate of depreciation .

The % rate of depreciation = (18,900/94,500) × 100.

% rate of depreciation = 20%

Since it is the double-declining-balance method of depreciation we multiply the % rate by 2 = 20% × 2 = 40%

Applying the rate to the carrying value of the asset to obtain current year's depreciation expense.

Current year's depreciation expense = Carrying value of the asset × the depreciation rate %.

Current year's depreciation expense = 125,000 × 40%.

Current year's depreciation expense = $75,000

4 0

3 years ago

Plowin' Supply plans to make 22 comma 000 tractors at its plant. Fixed costs are $ 550 comma 000 and variable costs are $ 180 pe

xz_007 [3.2K]

Answer:

$43

Explanation:

The total cost incurred by the company is made of two classes of cost namely; Fixed and variable cost. While the fixed cost is constant, the variable cost is dependent on the number of tractors produced.

A such,

Fixed cost = $550,000

Variable cost = 22000 × $180 = $396,000

Total cost = $550,000 + $396,000

= $946,000

The average cost per tractor is the result of the ratio of the total cost to the number of tractors

average cost per tractor = $946,000/22,000

= $43

5 0

3 years ago

On December 31, 2021, Perry Corporation leased equipment to Admiral Company for a five-year period. The annual lease payment, ex

ivanzaharov [21]

Answer:

$20,000

Explanation:

Calculation to determine by what amount will Perry's earnings increase due to this lease

Using this formula

Selling price=Fair value-Cost

Let plug in the formula

Selling price=$125,000-$105,000

Selling price=$20,000

Therefore The amount that Perry's earnings will increase due to this lease is $20,000

3 0

3 years ago

You want to measure the impact of the media in some way. You sample several advice columns found in "Playboy" and "Playgirl" and

jarptica [38.1K]

Answer:

The correct answer is: content analysis.

Explanation:

Content analysis is a research method used to find repetitive patterns in mediums of communication portraying the different types of content such as reviews, images, audio or video. Content analysis has mainly been used in social studies but it is being implemented in business applied to marketing techniques in an attempt to spot consumer patterns.

5 0

3 years ago

Read 2 more answers