Analysis of Overhead Using a Predetermined Rate

Analysis of Overhead Using a Predetermined Rate

Analysis of Overhead Using a Predetermined Rate
Analysis of Overhead Using a Predetermined Rate

Complete calculations and analysis of overhead using a predetermined rate for Atchison Company. Show all calculations.

Part 3 Scenario

Atchison Company uses a job costing accounting system for its production costs. The company uses a predetermined overhead rate based on direct labor-hours to apply overhead to individual jobs. The company prepared an estimate of overhead costs at different volumes for the current year as follows:

Atchison Company: Estimate of Overhead Costs

Item

Volume 1

Volume 2

Volume 3

Direct Labor-Hours

150,000

180,000

210,000

Variable Overhead Costs

$1,155,000

$1,386,000

$1,617,000

Fixed Overhead Costs

$712,800

$712,800

$712,800

Total Overhead

$1,867,800

$2,098,800

$2,329,800

The expected volume is 180,000 direct labor-hours for the entire year. The following information is for September, when Jobs 6023 and 6024 were completed:

Atchison Company: September Data

Item

Value

Inventories, September 1:

Materials and Supplies

$31,500

Work in Process (Job 6023)

$162,000

Finished Goods

$337,500

Material and Supply Purchases:

Materials

$445,500

Supplies

$49,500

Materials and Supplies Requisitioned for Production:

Job 6023

$148,500

Job 6024

$123,750

Job 6025

$84,150

Supplies

$19,800

$376,200

Factory Direct Labor-Hours (DLH):

Job 6023

$10,500

Job 6024

$9,000

Job 6025

$6,000

Labor Costs:

Direct Labor Wages (all hours @ $9)

$229,500

Indirect Labor Wages (12,000 hours)

$51,000

Supervisor Salaries

$118,800

Building Occupancy Costs (heat, light, depreciation, etc.):

Factory Facilities

$21,450

Sales and Administrative Offices

$8,250

Factory Equipment Costs:

Power

$13,200

Repairs and Maintenance

$4,950

Other

$8,250

$26,400

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