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Determine the amount of overhead to be applied to each job and to total production during this year

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Natural Cosmetics Company applies overhead costs on the basis of machine hours.;The overhead rate is computed by analyzing data from the previous year to determine the percentage change in costs.;Thus, this year's overhead rate will be based on the percentage change multiplied by last year's costs.;Last Year;Machine hours 55,360;Overhead costs;Indirect Labor $23,500.00;Employee Benefits $28,600.00;Manufacturing Supervision $18,500.00;Utilities $15,000.00;Factory Insurance $7,800.00;Janitorial Services $12,100.00;Depreciation-factory $21,300.00;Misc Overhead $6,000;$132,800;This year the cost of utilities is expected to increase by 40% over the previous year, the cost of indirect labor, employee benefits, and misc overhead;is expected to increase by 30% over the previous year, the cost of insurance and depreciation is expected to increase by 20% over the previous year;and the cost of supervision and janatorial services is expected to increase by 10% over the previous year. Machine hours are expected to total 68,786.;Required;1. Compute the projected costs and the overhead rate for this year, using the information about expected cost increases.;(Carry your answer to three decimal places).;2. Jobs completed during this year and the machine hours used were as follows;Job no. Machine hrs.;2214 12,300;2215 14,200;2216 9,800;2217 13,600;2218 11,300;2219 8,100;Determine the amount of overhead to be applied to each job and to total production during this year. (round answers to whole dollars);3. Actual overhead costs for this year were $165,845. Was overhead under-applied or over-applied? By how much? Should the Cost of Goods Sold account be increased or decreased to reflect actual overhead costs?

 

Paper#23574 | Written in 18-Jul-2015

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