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Exam 18: The Predetermined Overhead Rate and Capacity

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Question 21

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The management of Schneiter Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year.The company's controller has provided an example to illustrate how this new system would work.In this example,the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 42,000 machine-hours.In addition,capacity is 46,000 machine-hours and the actual activity for the year is 43,000 machine-hours.All of the manufacturing overhead is fixed and is $734,160 per year. Required: a.Determine the predetermined overhead rate if the predetermined overhead rate is based on activity at capacity. b.Determine the cost of unused capacity for the year if the predetermined overhead rate is based on activity at capacity.

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a.Predetermined overhead rate ...

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Question 22

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(Appendix 2B) Mausser Woodworking Corporation produces fine cabinets. The company uses a job-order costing system in which its predetermined overhead rate is based on capacity. The capacity of the factory is determined by the capacity of its constraint, which is an automated jointer. Additional information is provided below for the most recent month: -The gross margin that would be reported on the income statement prepared for internal management purposes would be closest to:

A) $52,760
B) $3,344
C) $12,644
D) $11,812

E) None of the above
F) All of the above

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Question 23

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(Appendix 2B) The management of Featheringham Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 62,000 machine-hours. Capacity is 75,000 machine-hours and the actual level of activity for the year is assumed to be 59,000 machine-hours. All of the manufacturing overhead is fixed and both the estimated amount at the beginning of the year and the actual amount at the end of the year are assumed to be $2,836,500 per year. It is assumed that a number of jobs were worked on during the year, one of which was Job Z77W which required 410 machine-hours. -If the company bases its predetermined overhead rate on capacity,then the amount of manufacturing overhead charged to job Z77W is closest to:

(Appendix 2B) Zackery Woodworking Corporation produces fine cabinets. The company uses a job-order costing system in which its predetermined overhead rate is based on capacity. The capacity of the factory is determined by the capacity of its constraint, which is an automated lathe. Additional information is provided below for the most recent month: -If the company bases its predetermined overhead rate on capacity,what would be the cost of unused capacity reported on the income statement prepared for internal management purposes?

Risser Woodworking Corporation produces fine cabinets.The company uses a job-order costing system in which its predetermined overhead rate is based on capacity.The capacity of the factory is determined by the capacity of its constraint,which is an automated jointer.Additional information is provided below for the most recent month: The gross margin that would be reported on the income statement prepared for internal management purposes would be closest to:

(Appendix 2B) Coble Woodworking Corporation produces fine cabinets. The company uses a job-order costing system in which its predetermined overhead rate is based on capacity. The capacity of the factory is determined by the capacity of its constraint, which is an automated shaper. Additional information is provided below for the most recent month: -The gross margin that would be reported on the income statement prepared for internal management purposes would be closest to:

(Appendix 2B) The management of Plitt Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 69,000 machine-hours. Capacity is 82,000 machine-hours and the actual level of activity for the year is assumed to be 72,400 machine-hours. All of the manufacturing overhead is fixed and both the estimated amount at the beginning of the year and the actual amount at the end of the year are assumed to be $4,130,340 per year. It is assumed that a number of jobs were worked on during the year, one of which was Job Q20L which required 470 machine-hours. -If the company bases its predetermined overhead rate on the estimated amount of the allocation base for the upcoming year,then the predetermined overhead rate is closest to:

(Appendix 2B) The management of Plitt Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 69,000 machine-hours. Capacity is 82,000 machine-hours and the actual level of activity for the year is assumed to be 72,400 machine-hours. All of the manufacturing overhead is fixed and both the estimated amount at the beginning of the year and the actual amount at the end of the year are assumed to be $4,130,340 per year. It is assumed that a number of jobs were worked on during the year, one of which was Job Q20L which required 470 machine-hours. -If the company bases its predetermined overhead rate on capacity,then the predetermined overhead rate is closest to:

(Appendix 2B) Dunnings Woodworking Corporation produces fine cabinets. The company uses a job-order costing system in which its predetermined overhead rate is based on capacity. The capacity of the factory is determined by the capacity of its constraint, which is an automated router. Additional information is provided below for the most recent month: -If the company bases its predetermined overhead rate on the estimated amount of the allocation base for the upcoming year,then the predetermined overhead rate is closest to:

The management of Buelow Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year.The company's controller has provided an example to illustrate how this new system would work. Job Q58A,which required 130 machine-hours,is one of the jobs worked on during the year. Required: a.Determine the predetermined overhead rate if the predetermined overhead rate is based on the estimated activity for the upcoming year. b.Determine how much overhead would be applied to Job Q58A if the predetermined overhead rate is based on estimated activity for the upcoming year. c.Determine the predetermined overhead rate if the predetermined overhead rate is based on the activity at capacity. d.Determine how much overhead would be applied to Job Q58A if the predetermined overhead rate is based on activity at capacity. e.Determine the cost of unused capacity for the year if the predetermined overhead rate is based on activity at capacity.

Danaher Woodworking Corporation produces fine furniture.The company uses a job-order costing system in which its predetermined overhead rate is based on capacity.The capacity of the factory is determined by the capacity of its constraint,which is an automated lathe.Additional information is provided below for the most recent month: Required: a.Calculate the predetermined overhead rate based on capacity. b.Calculate the manufacturing overhead applied. c.Calculate the cost of unused capacity.

The management of Bouyer Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year.The company's controller has provided an example to illustrate how this new system would work.In this example,the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 34,000 machine-hours.In addition,capacity is 37,000 machine-hours and the actual activity for the year is 34,700 machine-hours.All of the manufacturing overhead is fixed and is $377,400 per year. Required: Determine the cost of unused capacity for the year if the predetermined overhead rate is based on activity at capacity.

The management of Wrights Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year.The company's controller has provided an example to illustrate how this new system would work. Required: a.Determine the predetermined overhead rate if the predetermined overhead rate is based on the estimated activity for the upcoming year. at capacity. b.Determine the cost of unused capacity for the year if the predetermined overhead rate is based on activity at capacity.

(Appendix 2B) Zackery Woodworking Corporation produces fine cabinets. The company uses a job-order costing system in which its predetermined overhead rate is based on capacity. The capacity of the factory is determined by the capacity of its constraint, which is an automated lathe. Additional information is provided below for the most recent month: -The cost of unused capacity that would be reported as a period expense on the income statement prepared for internal management purposes would be closest to:

Traeger Woodworking Corporation produces fine cabinets.The company uses a job-order costing system in which its predetermined overhead rate is based on capacity.The capacity of the factory is determined by the capacity of its constraint,which is an automated bandsaw.Additional information is provided below for the most recent month: The cost of unused capacity that would be reported as a period expense on the income statement prepared for internal management purposes would be closest to:

Rapier Woodworking Corporation produces fine cabinets.The company uses a job-order costing system in which its predetermined overhead rate is based on capacity.The capacity of the factory is determined by the capacity of its constraint,which is an automated jointer.Additional information is provided below for the most recent month: The predetermined overhead rate based on hours at capacity is closest to:

(Appendix 2B) Coble Woodworking Corporation produces fine cabinets. The company uses a job-order costing system in which its predetermined overhead rate is based on capacity. The capacity of the factory is determined by the capacity of its constraint, which is an automated shaper. Additional information is provided below for the most recent month: -The manufacturing overhead applied is closest to:

The management of Winterroth Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity.The Corporation's controller has provided an example to illustrate how this new system would work.In this example,the allocation base is machine-hours. If the Corporation bases its predetermined overhead rate on capacity,then as shown on the income statement prepared for internal management purposes,the cost of unused capacity would be closest to:

(Appendix 2B) The management of Featheringham Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 62,000 machine-hours. Capacity is 75,000 machine-hours and the actual level of activity for the year is assumed to be 59,000 machine-hours. All of the manufacturing overhead is fixed and both the estimated amount at the beginning of the year and the actual amount at the end of the year are assumed to be $2,836,500 per year. It is assumed that a number of jobs were worked on during the year, one of which was Job Z77W which required 410 machine-hours. -If the company bases its predetermined overhead rate on capacity,what would be the cost of unused capacity reported on the income statement prepared for internal management purposes?

(Appendix 2B) Dunnings Woodworking Corporation produces fine cabinets. The company uses a job-order costing system in which its predetermined overhead rate is based on capacity. The capacity of the factory is determined by the capacity of its constraint, which is an automated router. Additional information is provided below for the most recent month: -The predetermined overhead rate based on hours at capacity is closest to: