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14 November, 09:50

Predetermined Overhead Rate, Applied Overhead, Unit Cost Ripley, Inc., costs products using a normal costing system. The following data are available for last year: Budgeted: Overhead $285,600 Machine hours 84,000 Direct labor hours 10,200 Actual: Overhead $285,000 Machine hours 82,200 Direct labor hours 9,930 Prime cost $1,050,000 Number of units 150,000 Overhead is applied on the basis of direct labor hours. Required: 1. What was the predetermined overhead rate? $ per direct labor hour 2. What was the applied overhead for last year? $ 3. Was overhead over - or underapplied, and by how much? = $ 4. What was the total cost per unit produced (carry your answer to four significant digits) ? $ per unit

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  1. 14 November, 10:23
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    1. $28

    2. $278,040

    3. $7,560 under-applied

    4. $8.8536

    Explanation:

    The computation is shown below

    1. Predetermined overhead rate = (Total Budgeted: Overhead) : (estimated direct labor-hours)

    = $285,600 : 10,200 hours

    = $28

    2. The applied overhead would be

    = Actual direct labor-hours * predetermined overhead rate

    = 9,930 hours * $28

    = $278,040

    3. The over applied or under applied would be

    = Actual manufacturing overhead - applied overhead

    = $285,600 - $278,040

    = $7,560 under-applied

    4. Total cost per unit would be

    = (Prime Cost + Applied Overhead) : (Number of units)

    = ($1,050,000 + $278,040) : (150,000 units

    = $1,328,040 : 150,000 units

    = $8.8536
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