Calculate the allocation rate for 20x2

Reference no: EM13988115

1. Discuss the Treatment of Normal and Abnormal Spoilage under Job Costing.

2. PNG Corporation designs and builds roller coasters for amusement parks. At the end of 20x1, managers estimated overhead costs for 20x2 of $150,000 based on expected production of 5 roller coasters (5 jobs) using 5,000 labor hours each. Actual overhead costs for 20x2 were $170,000. PNG actually designed and built 6 roller coasters (6 jobs) with the following direct labor usage and overhead costs:

Actual Overhead Cost actual Labor Hours

The Big Dipper (job 1) $28,000 3,500

The Ultimate Scream (job 2) 35,000 4,000

Loop Me (job 3) 27,000 5,000

The Screaming Chicken (job 4) 40,000 2,500

You Don't Know Coasters (job 5) 25,000 6,000

Old Faithful (job 6) 15,000 4,500

Assume PNG uses a normal costing system with the number of labor hours as the overhead allocation base.

a. Calculate the allocation rate for 20x2.

b. Calculate the total corporate over- or under applied overhead (specify which) for 20x2.

Reference no: EM13988115

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