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Question at position 10 [table] VivaVista Manufacturing uses a predetermined overhead rate based on labor-hours to apply manufacturing overhead to jobs. Data concerning the company’s manufacturing operations for a job in year 2020 are provided below in the table. If unadjusted COGS during 2020 is $500,000, compute the adjusted COGS. | Actual labor-hours................................................... | 10,000 Actual manufacturing overhead cost incurred........ | $200,000 Estimated labor hours............................................. | 8,000 Estimated manufacturing overhead cost................ | $208,000 [/table]Answer[table] VivaVista Manufacturing uses a predetermined overhead rate based on labor-hours to apply manufacturing overhead to jobs. Data concerning the company’s manufacturing operations for a job in year 2020 are provided below in the table. If unadjusted COGS during 2020 is $500,000, compute the adjusted COGS. | Actual labor-hours................................................... | 10,000 Actual manufacturing overhead cost incurred........ | $200,000 Estimated labor hours............................................. | 8,000 Estimated manufacturing overhead cost................ | $208,000 [/table][input]
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Step-by-Step Analysis
We start by identifying the key data and the overhead allocation method used. VivaVista applies manufacturing overhead to jobs using a predetermined overhead rate (POR) based on labor-hours. The POR is calculated from estimated figures, but the applied overhead uses actual hours.
Step 1: Compute the POR.
POR = Esti......Login to view full explanationLog in for full answers
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A predetermined overhead rate is calculated by dividing estimated total manufacturing overhead cost by estimated units in the allocation base.
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