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kondaur [170]
3 years ago
5

Platt Company produces one product, a putter called PAR-putter. Platt uses a standard cost system and determines that it should

take one hour of direct labor to produce one PAR-putter. The normal production capacity for this putter is 100,000 units per year. The total budgeted overhead at normal capacity is $500,000 comprised of $200,000 of variable costs and $300,000 of fixed costs. Platt applies overhead on the basis of direct labor hours. During the current year, Platt produced 85,000 putters, worked 89,000 direct labor hours, and incurred variable overhead costs of $160,000 and fixed overhead costs of $300,000.
1. Compute the pre-determined variable overhead rate and the pre-determined fixed overhead rate.

Variable Overhead Rate

Fixed Overhead Rate

2. Compute the applied overhead for Platt for the year.

Applied Overhead

3. Compute the total overhead variance

Total Overhead Variance
Business
1 answer:
rodikova [14]3 years ago
3 0

Answer:

Instructions are below.

Explanation:

Giving the following information:

The normal production capacity for this putter is 100,000 units per year. The total budgeted overhead at normal capacity is $500,000 comprised of $200,000 of variable costs and $300,000 of fixed costs.

Platt produced 85,000 putters, worked 89,000 direct labor hours, and incurred variable overhead costs of $160,000 and fixed overhead costs of $300,000.

First, we need to calculate the estimated overhead rate:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Variable= 200,000/100,000= $2 per direct labor hour

Fixed= 300,000/100,000= $3 per direct labor hour

Total= $5

Now, we can allocate overhead:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 89,000*5= $445,000

Finally, the total overhead variance:

TOTAL OVERHEAD VARIANCE = Actual Factory Overhead - Standard Factory Overhead

TOTAL OVERHEAD VARIANCE= 460,000 - 445,000

TOTAL OVERHEAD VARIANCE = $15,000 unfavorable

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Answer

Economic order quantity will be 447.21

Explanation:

We have given monthly demand = 10000 units

We know that 1 year = 12 month

So Annual demand (D) = monthly demand × 12 months = 10000 × 12 = 120000 units

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Economic order quantity = \sqrt{\frac{2DS}{H}}=\sqrt{\frac{2\times 12000\times 5}{6}}=447.21

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<u>Solution and Explanation:</u>

Date  General Journal                                 Debit  Credit  

January 1, 2017  Cash/Liquidity Finance Co.  680000    

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 Profit on sale of computer system              80000  

To record the sale of computer systems          

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 Cash                                                              115970  

To record the first lease rental of the lease                  Journal entries in the books of lesser(Liquidity Finance Co.)    

                                                               Amount in $  

Date  General Journal                                          Debit  Credit  

January 1, 2017  Computer system           680000    

 Cash/Elmer's Restaurants                            680000  

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January 1, 2017  Cash                               115970    

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To record the first receipt towards lease rental of the lease      

December 31, 2017  Depreication on computer system 68000    

 Accumulated depreication on computer system           68000  

To record the depreication expense for the year    

 

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