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