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]

Question

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]

BlackTom AI · Accepted Answer

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 = Estimated overhead cost / Estimated labor hours
POR = $208,000 / 8,000 hours = $26 per labor-hour.

Step 2: Determine overhead applied to the job using actual labor-hours.
Applied overhead = Actual labor-hours × POR
Applied overhead = 10,000 hours × $26/hour = $260,000.

Step 3: Compare applied overhead to actual overhead incurred.
Actual overhead cost incurred = $200,000.
Overapplied (or underapplied) overhead = Applied - Actual = $260,000 − $200,000 = $60,000 overapplied.

Step 4: Adjust COGS for overapplied overhead.
When overhead is overapplied, the extra overhead is subtracted from COGS to arrive at the adjusted COGS.
Adjusted COGS = Unadjusted COGS − Overapplied overhead
Adjusted COGS = $500,000 − $60,000 = $440,000.

If you’re comparing to the provided answer, this calculation yields $440,000 as the adjusted COGS after accounting for the overapplied overhead.

Additional note: The logic hinges on the convention that overapplied overhead reduces COGS, while underapplied overhead would increase COGS. The POR is based on estimates, so differences between actual and estimated figures routinely occur, but the adjustment process remains the same: compute applied overhead from actual activity, compare to actual overhead, and adjust COGS accordingly.

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类似问题

A predetermined overhead rate is calculated by dividing estimated total manufacturing overhead cost by estimated units in the allocation base.

A company with two departments—one labour-intensive and one machine-intensive—wants to improve overhead allocation accuracy. Which method is least likely to reduce cost distortion?

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