Partl At the beginning of the current year CCCR Company est

Partl - At the beginning of the current year CCCR Company estimated the following costs Direct materials Direct labour Rent on factory building Sales salaries Depreciation on factory equipment Indirect labour Production supervisor\'s salary $4,000 $20,000 $15,000 $25,000 $8,000 $10,000 $12,000 CCC Company estimated 20,000 labour hours to be worked during the year. Actual labour hours worked were 22,000 hours. If overhead is applied on the basis of direct labour hours, what will be the overhead applied for the year? (2 marks) Part 2-RRR Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. The year and direct labour hours at 100,000 hours. the year totalled $270,000; actual direct labour hours were 105,000. What was the overapplied or underapplied overhead for the year? (3 marks) company estimated manufacturing overhead at $255,000 for the Actual manufacturing overhead costs incurred during

Solution

Part.1 Expected Overhead costs for the year Rent on factory building 15000 Sales salaries 25000 Depreciation on fcatory equipment 8000 Indirect labor 10000 Production supervisor\'s salary 12000 Total Ohs 70000 Direct labor hrs. expected to be worked during the year 20000 So, OH application rate for the year=70000/20000= 3.5 Ie. $ 3.5 per D/L hr. So, OH applied for the year= 22000*3.5= 77000 Part.2 Estimated mfg. OH for the Year 255000 Direct Labor hrs.estd. 100000 So, OH application rate for the year=255000/100000= 2.55 Ie. $ 2.5 per D/L hr. Actual direct lab. Hrs. 105000 So, OH applied(105000*2.5) 262500 Actual mfg. Ohs incurred 270000 So, under application Ohs (270000-262500)= 7500 ANSWER: Under-applied Ohs for the Year 7500