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QUESTION 1 DeLima Enterprise using direct labor hours as basis for calculating predetermined overhead rate. 1...

QUESTION 1

DeLima Enterprise using direct labor hours as basis for calculating predetermined overhead rate. 1 January 2020, estimated total manufacturing overhead cost is RM165,600. Information for 31 December 2020 are as followed:

Total actual direct labor hours

11,900 hours

Total actual manufacturing overhead cost

RM160,600

Manufacturing overhead cost overapplied

RM10,760

Required: Calculate predetermined overhead rate for 2020

:

QUESTION 2

By 2020, predetermined overhead rate for Merbok Company is RM80 per machine hours. At the beginning of year 2020, the company estimates manufactuirng overhead cost for the current year amount to RM400,000.  Year around 2020, the total actual manufacturing overhead cost incurred by company is RM440,000. Manufacturing overhead company accounts show overapplied for overhead amount to RM16,000.
 
Required:
  1. Determined how many estimation machine hours for 2020?
  2. Determine how many machine hours have been involved thoughout 2020?

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Answer #1

Part 1) Calculation of Pre determined overhead rate

PREDETERMINED OVERHEAD RATE =$14.4 PER HOUR

Over applied overhead = Applied overhead - Actual overhead

10760 = Applied overhead- 160600

Applied overhead =$171360

Applied overhead = Actual labor hours * predetermined o/h rate

171360 =11900 * predetermined o/h rate

Predetermined o/h rate =$14.4 per hour

Part 2)a) ESTIMATED MACHINE HOURS

Predetermined o/h rate = Estimated overhead/ Estimated machine hours

80 =400000/Estimated machine hours

Estimated machine hours =5000 hours

b) Actual Machine hours for 2020

Over applied overhead = Applied o/h - Actual o/h

16000 = Applied o/h - 440000

Applied o/h =$456000

Applied o/h = Actual machine hours * predetermined o/h rate

456000 = Actual machine hours * 80

Actual machine hours =5700 hours

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