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Factory Overhead 1,000,000 800,000: Problem 1 - The Denmark Company 1. Material Cost

The document contains 5 problems about allocating overhead costs using different allocation bases like direct labor hours, machine hours and direct materials costs. Problem 1 discusses different allocation rates using various allocation bases. Problem 2 calculates overhead application and under/over application. Problem 3 allocates overhead to work in process, finished goods and cost of goods sold. Problem 4 allocates overhead to different jobs using a 180% overhead rate. Problem 5 compares direct, step and algebraic allocation methods and calculates overhead allocation amounts.

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Mico Nechaldas
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586 views11 pages

Factory Overhead 1,000,000 800,000: Problem 1 - The Denmark Company 1. Material Cost

The document contains 5 problems about allocating overhead costs using different allocation bases like direct labor hours, machine hours and direct materials costs. Problem 1 discusses different allocation rates using various allocation bases. Problem 2 calculates overhead application and under/over application. Problem 3 allocates overhead to work in process, finished goods and cost of goods sold. Problem 4 allocates overhead to different jobs using a 180% overhead rate. Problem 5 compares direct, step and algebraic allocation methods and calculates overhead allocation amounts.

Uploaded by

Mico Nechaldas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

Problem 1 - The Denmark Company

1. Material Cost
Factory Overhead = 1,000,000 =
800,000

2. Units of Production
Factory Overhead = 1,000,000 =
20,000

3. Machine hours
Factory Overhead = 1,000,000 =
160,000

4. Direct Labor Cost


Factory Overhead = 1,000,000 =
500,000

5. Direct Labor Hours


Factory Overhead = 1,000,000 =
50,000
1.25 = 125%

P50 per unit

P6.25

200%

P20
Problem 2 - Marco Company

1. Overhead Application Rate


Factory Overhead Rate = 510,000 = P2.55 /DLHr.
200,000

2.) Applied Factory Overhead


Factory Overhead Applied = 210,000 * 2.55

3.) Over or Underapplied Overhead


Factory Overhead Control 540,000
Less Applied (535,500)
Underapplied P4,500
= 535,500
Problem 3 - Marvin Company

A.
1. Applied Factory Overhead
Work in Process 473,200
Factory Overhead Applied (84,500 x 5.6) 473,200

Factory Overhead Rate


456,120 = 5.6
81450

2. Actual Factory Overhead


Factory Overhead Control 470,800
Misc. Accounts 470,800

3. Closing of Applied Overhead and Actual Factory Account


Factory Overhead Applied 473,200
Cost of Goods Sold 2,400
Factory Overhead Control 470,800

B.
Cost of Goods Sold = 350,000
473,200

Finished Goods = 100,000


473,200

Work-in-Process = 23,200
473,200
* 2,400 = 1,775

* 2,400 = 507

* 2,400 = 118
Problem 4 - Ellery Corporation

1. Amount of Overhead to be added


Job 123 124 125
Direct Labor 600 940 1,400
Factory Overhead Rate 180% 180% 180%
Applied Factory Overhead 1,080 1,692 2,520

2. Total cost of each job


Job 123 124 125
Direct Materials 300 1,080 720
Direct Labor 600 940 1,400
Factory Overhead 1,080 1,692 2,520
Total 1,980 3,712 4,640
126
5,120
180%
9,216

126 Total
4,200 6,300
5,120 8,060
9,216 14,508
18,536 28,868
Problem 5 - Thermal Corporation

1.)
a. Direct Method
P1 P2 S1
Direct Cost 90,000 60,000 20,000
Allocated Cost
S1 10,000 10,000 (20000)
S2 20,000 12,000
Total 120,000 82,000
Base 50,000 MHrs. 20,000 DLHrs.
Factory Overhead Rate P2.4 /MHr. P4.1/DLHr.

b.) Step Method


P1 P2 S1
Direct Cost 90,000 60,000 20,000
Allocated Cost
S1 2,000 2,000 (20000)
S2 30,000 18,000
Total 122,000 80,000
Base 50,000 MHrs. 20,000 DLHrs.
Factory Overhead Rate P2.44 /MHr. P4 /DLHr.

c.) Algebraic Method


P1 P2 S1
Direct Cost 90,000 60,000 20,000
Allocated Cost
S1 3,143 3,143 (31,429)
S2 28,572 17,143 11,429
Total 121,715 80,286
Base 50,000 MHrs. 20,000 DLHrs.
Factory Overhead Rate P2.43 /MHr. P4 /DLHr.

2.)
S1 = 20,000 + 20%
S2 = 32,000 + 80%

S1 = 20,000 + 20%(32,000+80%)
=20,000 + 6,400 + .16
=26,400
=26,400 / .84
=31,429

S2 = 32,000 + 80%
=32,000 + 25,143
=57,143
S2
32,000

(32,000)

S2
32,000

16,000
(48,000)

S2
32,000

25,143
(57,143)

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