The following information pertains to Sandy Sand Company for 2021. Budgeted direct-labour cost: -90,000 hours at $24 per hour Actual direct-labour cost: -95,000 hours at $25.50 per hour. Budgeted Manufacturing Overhead: -$ 985,500 Actual Manufacturing Overhead: Depreciation $ 240,000 Property Taxes-- 12,000 Indirect Labour -82,000 Supervisory Salaries -200,000 Utilities---- 59,000 Insurance -30,000 Rental of Space- 300,000 Indirect Material 79,000 Required a) Compute the firm's predetermined overhead rate, which is based on direct-labour hours. b) Calculate the over-applied or under-applied overhead for 2021. c) Prepare a journal entry to close out the Manufacturing Overhead Account into Cost of Goods Sold. d) Activity based costing (ABC) is an alternative method of allocating overheads. How is ABC useful to managers?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter4: Job Order Costing
Section: Chapter Questions
Problem 7EA: A company estimates its manufacturing overhead will be $750,000 for the next year. What is the...
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The following information pertains to Sandy Sand Company for 2021.
Budgeted direct-labour cost:
-90,000 hours at $24 per hour
Actual direct-labour cost:
-95,000 hours at $25.50 per hour.
Budgeted Manufacturing Overhead:
-$ 985,500
Actual Manufacturing Overhead:
Depreciation
$ 240,000
Property Taxes--
-12,000
Indirect Labour
-82,000
Supervisory Salaries
-200,000
Utilities----
59,000
Insurance
-30,000
Rental of Space-
300,000
Indirect Material
79,000
Required
a) Compute the firm's predetermined overhead rate, which is based on direct-labour
hours.
b) Calculate the over-applied or under-applied overhead for 2021.
c) Prepare a journal entry to close out the Manufacturing Overhead Account into Cost of
Goods Sold.
d) Activity based costing (ABC) is an alternative method of allocating overheads. How
is ABC useful to managers?
Transcribed Image Text:The following information pertains to Sandy Sand Company for 2021. Budgeted direct-labour cost: -90,000 hours at $24 per hour Actual direct-labour cost: -95,000 hours at $25.50 per hour. Budgeted Manufacturing Overhead: -$ 985,500 Actual Manufacturing Overhead: Depreciation $ 240,000 Property Taxes-- -12,000 Indirect Labour -82,000 Supervisory Salaries -200,000 Utilities---- 59,000 Insurance -30,000 Rental of Space- 300,000 Indirect Material 79,000 Required a) Compute the firm's predetermined overhead rate, which is based on direct-labour hours. b) Calculate the over-applied or under-applied overhead for 2021. c) Prepare a journal entry to close out the Manufacturing Overhead Account into Cost of Goods Sold. d) Activity based costing (ABC) is an alternative method of allocating overheads. How is ABC useful to managers?
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