Predetermined Overhead Rate, Applied Overhead, Unit Cost Ripley, Inc., costs products using a normal costing system. The following data are available for last year: Budgeted: Overhead $285,600 Machine hours 84,000 Direct labor hours 10,200 Actual: Overhead $285,000 Machine hours 82,200 Direct labor hours 9,930 Prime cost $1,050,000 Number of units 150,000 Overhead is applied on the basis of direct labor hours. Required: 1. What was the predetermined overhead rate? $ per direct labor hour 2. What was the applied overhead for last year? $ 3. Was overhead over - or underapplied, and by how much? = $ 4. What was the total cost per unit produced (carry your answer to four significant digits) ? $ per unit

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17 October, 22:31

Predetermined Overhead Rate, Applied Overhead, Unit Cost Ripley, Inc., costs products using a normal costing system. The following data are available for last year: Budgeted: Overhead $285,600 Machine hours 84,000 Direct labor hours 10,200 Actual: Overhead $285,000 Machine hours 82,200 Direct labor hours 9,930 Prime cost $1,050,000 Number of units 150,000 Overhead is applied on the basis of direct labor hours. Required: 1. What was the predetermined overhead rate? $ per direct labor hour 2. What was the applied overhead for last year? $ 3. Was overhead over - or underapplied, and by how much? = $ 4. What was the total cost per unit produced (carry your answer to four significant digits) ? $ per unit

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Answers (1)

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Reuben Patrick · Answer 1

1. $28

2. $278,040

3. $7,560 under-applied

4. $8.8536

Explanation:

The computation is shown below

1. Predetermined overhead rate = (Total Budgeted: Overhead) : (estimated direct labor-hours)

= $285,600 : 10,200 hours

= $28

2. The applied overhead would be

= Actual direct labor-hours * predetermined overhead rate

= 9,930 hours * $28

= $278,040

3. The over applied or under applied would be

= Actual manufacturing overhead - applied overhead

= $285,600 - $278,040

= $7,560 under-applied

4. Total cost per unit would be

= (Prime Cost + Applied Overhead) : (Number of units)

= ($1,050,000 + $278,040) : (150,000 units

= $1,328,040 : 150,000 units

= $8.8536