Find out overhead application rate, Cost Accounting

Assignment Help:

Find Out Overhead Application Rate

The given is the budget of Superb Engineering Works for the 2002 year

Factory overheads

Kshs 62,000

Direct labour cost

Kshs 98,000

Direct labour hours

155,000

Machine hours           

50,000

Actual labour hours were

40,000

Actual machine hours were

30,000

Actual direct labour costs were

         Kshs   50,000

Actual direct material costs were

Kshs 45,000

Required

a) Find out the overhead application rate on the basis of

i. Direct labour hours

ii. Overhead costs

iii. Machine hours, and

iv. Direct labour cost

v. Production cost

Solution

i. Direct labour hours method

Overhead application rate (OAR) = 62,000/15,500

= Shs.0.4/labour hour

ii. Direct labour cost method

OAR = (62,000/98,000) * 100

= 63.27 percent

iii. Machine hour method

OAR = (62,000/50,000) * 100

Shs.1.24/machine hour

b) Overhead costs utilizing

i. Direct labour hours = 0.4 x 40000 = Shs 16000

ii. Direct labour cost = 63.27% x 50000 = Shs 31630

iii. Machine hours = 30,000 x 1.24 = Shs 37200

c) Production cost utilizing each of the methods

 

Prime cost

Overheads

Total cost

Cost/unit

i. Direct labour hours

95,000

16,000

111,000

111.00

ii. Direct labour cost

95,000

31,630

126,630

126.63

iii. Machine hours      

95,000

37,200

132,200

132.20

 


Related Discussions:- Find out overhead application rate

Internal users of accounting information, Describe the ways in which the ne...

Describe the ways in which the needs of internal and external users of accounting information are the same and different.

Average cost, Under the average cost method the average cost of goods held ...

Under the average cost method the average cost of goods held in stock is recalculated after each receipt. An issue after the receipts is made at the recalculated average prices. A

Assignment of variance in variance calculation, Assignment of Variance in V...

Assignment of Variance in Variance Calculation In variances calculating, the calculations require to be detailed sufficient hence the responsibility for the variance can be a

Prepare the general journal entry to record this requisition, Erlander Comp...

Erlander Company uses a job order cost accounting system. On November 1 2013, $15,000 of direct materials and $3,500 of indirect materials were requisitioned for production. Prepar

Prepare the consolidated balance sheet, H Bhd has a 75% holding in the ordi...

H Bhd has a 75% holding in the ordinary shares of S Sdn Bhd and 40% in A Sdn Bhd. Shares in S were acquired  in 2006 when its retained earnings were RM120 million.  The shares in A

Total annual sales revenue, Mr. Homer Simpson, President and Chief Executiv...

Mr. Homer Simpson, President and Chief Executive Officer of Duff's Beer Making Supplies Inc. recently hired you as the new budget analyst for his company.  As your first duty, he h

Effects of increasing fixed cost, Jones Company operates within a monopolis...

Jones Company operates within a monopolistically competitive industry. The estimated demand for its products is given by the following inverse demand function P = 1760 - 12Q

Determine the expected range of returns , Series Arithmetic Mean ...

Series Arithmetic Mean Standard Deviation   Small-company stocks 15.9  % 32.8  %   Large-company

Process costing, If question (CA IPCC) is silent which method to follow: av...

If question (CA IPCC) is silent which method to follow: avg cost or fifo or lifo?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd