Contribution margin: $56,000
Net Operating Income: $ 20,000
What predetermined overhead rates would be used in the Machining and Assembly Departments, respectively?
$5.00 and 200%
Feedback: The predetermined overhead rates are determined as follows.Machining Department: Predetermined overhead rate = Estimated overhead cost ÷ Estimated machine hours Predetermined overhead rate = $25,000 ÷ 5,000 MHs = $5.00 per MHAssembly Department: Predetermined overhead rate = Estimated overhead cost ÷ Estimated direct labor costPredetermined overhead rate = $30,000 ÷ $15,000 = 200%
overapplied by $50,000
Which one of the following costs should NOT be considered a direct cost of serving a particular customer who orders a customized personal computer by phone directly from the manufacturer?
The cost of leasing a machine on a monthly basis that automatically tests hard disk drives before they are installed in computers.
Given: Direct labor cost = $12,000; Direct labor cost = 0.40 x Prime cost; Total manufacturing cost = $73,000; Calculation: Direct labor cost = 0.40 ´ Prime cost Prime cost = Direct labor cost ¸ 0.40 Prime cost = $12,000 ¸ 0.40 = $30,000 Total manufacturing cost = Prime cost + Manufacturing overhead cost $73,000 = $30,000 + Manufacturing overhead cost Manufacturing overhead cost = $43,000
In an income statement segmented by product line, a fixed expense that cannot be allocated among product lines on a cause-and-effect basis should be:
The operations of the Kerry Company resulted in underapplied overhead of $5,000.
The entry to close out this balance to Cost of Goods Sold and the effect of the underapplied overhead on Cost of Goods Sold would be:
Cost of Goods Sold 5000(d)
Manufacturing Overhead 0 5000(c)
Effect on Cost of Goods Sold
Feedback: Product costs = Direct materials + Direct labor + Manufacturing overhead= $153,000 + $84,000 + $90,000 (9,000+49,000+32,000)= $327,000
Manufacturing Overhead (debit)
Cost of Goods Sold (credit)