Question

# Predetermined Overhead Rate, Applied Overhead, Unit Cost Ripley, Inc., costs products using a normal costing system....

Ripley, Inc., costs products using a normal costing system. The following data are available for last year:

 Budgeted: Overhead \$296,800 Machine hours 81,000 Direct labor hours 10,600 Actual: Overhead \$296,100 Machine hours 79,200 Direct labor hours 10,210 Prime cost \$1,514,120 Number of units 180,000

Overhead is applied on the basis of direct labor hours.

Required:

1. What was the predetermined overhead rate?
\$ per direct labor hour

2. What was the applied overhead for last year?
\$

3. Was overhead over- or underapplied, and by how much?
= \$

4. What was the total cost per unit produced? (Carry your answer to four significant digits.)
\$ per unit

1)

= Total cost / Direct labour hours

= 296,800/10,600

= \$28 per direct labour hour

2)

= Actual overhead/ Actual direct labour hour

= 296,100/10,210

= \$29 per direct labour hour

3)

As the overhead applied is higher than the predetermined overhead rate therefore the overhead was overapplied by ( 29 - 28) = \$1 per direct labour hour

4)

Total cost per unit produced

Prime cost = 1,514,120

Total cost = \$1,810,220

Total units = 180,000

Cost per unit

= 1,810,220/180,000

= \$10.0568 per unit.

#### Earn Coins

Coins can be redeemed for fabulous gifts.