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LUCKY_DIMON [66]
3 years ago
7

Calculating the Predetermined Overhead Rate, Applying Overhead to Production, Reconciling Overhead at the End of the Year, Adjus

ting Cost of Goods Sold for Under- and Overapplied Overhead At the beginning of the year, Han Company estimated the following: Overhead $160,000 Direct labor hours 80,000 Han uses normal costing and applies overhead on the basis of direct labor hours. For the month of January, direct labor hours were 8,150. By the end of the year, Han showed the following actual amounts: Overhead $166,000 Direct labor hours 79,600 Assume that unadjusted Cost of Goods Sold for Han was $176,000. Required: 1. Calculate the predetermined overhead rate for Han. Round your answers to the nearest cent, if rounding is required. $ per direct labor hour 2. Calculate the overhead applied to production in January. (Note: Round to the nearest dollar, if rounding is required.) $ 3. Calculate the total applied overhead for the year. $ Was overhead over- or underapplied? By how much? overhead $ 4. Calculate adjusted Cost of Goods Sold after adjusting for the overhead variance.
Business
1 answer:
Usimov [2.4K]3 years ago
3 0

Answer:

Instructions are listed below

Explanation:

Giving the following information:

Estimated:

Overhead $160,000

Direct labor hours 80,000

Han uses normal costing and applies overhead based on direct labor hours.

For January, direct labor hours were 8,150.

By the end of the year, Han showed the following actual amounts:

Overhead $166,000

Direct labor hours 79,600

Assume that the unadjusted Cost of Goods Sold for Han was $176,000.

1) Predetermined overhead rate= total estimated overhead for the period/ total amount of allocation base

Predetermined overhead rate=160000/80000= $2 per hour

2) Applied overhead (January)= Predetermined overhead rate*actual hours= 2*8150= $16,300

3) Applied overhead for the year= 2*79600= $159,200

Over/under applied= actual overhead - applied overhead= 166000 - 159200= 6800 underapplied

4) COGS= 176000

Underapplied overhead= 6800

COGS adjusted= $182,800

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