A company that sells baking equipment

Reference no: EM131094913

Innen Outen is a company that sells baking equipment. It makes three different products in a single manufacturing facility. The following budgeted overhead amounts are for 2016: Indirect Labor 20,000 Supplies 15,000 Depreciation 40,000 Supervision 120,000 Insurance 30,000 Miscellaneous 12,000 Total $237,000 Innen Outen applies overhead costs to production based on direct labor hours (DLH). Their estimate for 2016 DLH is 20,000. Required: 1. Calculate the predetermined overhead rate the company will use for 2016. 2. Assume that they actually use 22,000 DLH during the year and incur $240,000 in overhead costs. Calculate the amount of overhead applied to production for the year. 3. Show calculations for the amount of overhead over- or under-applied for 2016. 4. Should Innen Outen consider changing their overhead application method at this time? Their results are fairly consistent with expectations. Explain what might lead them to consider a change.

Reference no: EM131094913

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