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Overhead Analysis and Cost Calculation Guide

The document outlines four problems related to cost accounting, including calculations for under- or overapplied overhead for Hume and Miller Corporations, power cost estimation for Leon Corporation using the high-low method, and cost analysis for Action Trainers' programs. Each problem requires specific computations and journal entries for financial reporting. The document emphasizes the application of different accounting methods to analyze costs and overheads.

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31 views2 pages

Overhead Analysis and Cost Calculation Guide

The document outlines four problems related to cost accounting, including calculations for under- or overapplied overhead for Hume and Miller Corporations, power cost estimation for Leon Corporation using the high-low method, and cost analysis for Action Trainers' programs. Each problem requires specific computations and journal entries for financial reporting. The document emphasizes the application of different accounting methods to analyze costs and overheads.

Uploaded by

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

PROBLEM 1

Hume Corporation has the following data for the current year:

Direct Labor $220,000


Direct Material 137,800
Actual Overhead 320,000
Applied Overhead 395,000
Raw Material 51,394
Work in Process 101,926
Finished Goods 111,192
Cost of Goods Sold 250,182

What is the amount of under- or overapplied overhead? Prepare the necessary journal entry to dispose of
under- or overapplied overhead.

PROBLEM 2

Leon Corporation has the following data relating to its power usage for the first six months of the current year.

Month Usage (Kw)Cost


Jan. 500 $450
Feb. 550 455
Mar. 475 395
Apr. 425 310
May 450 380
June 725 484

Assume usage is within the relevant range of activity.

Required:

a. Using the high-low method, compute the cost formula.

b. Leon Corporation estimates its power usage for July at 660 watts. Compute the total
power cost for July.

PROBLEM 3

Miller Corporation applies overhead at the rate of 70 percent of direct labor. Miller incurred $450,000 of direct
labor during the current year. Miller incurred actual overhead of $367,000.

(a) Compute the amount of under- or overapplied overhead for Miller Corporation for the current year
(b) Prepare the necessary journal entry to dispose of the under- or overapplied overhead (assuming that
the amount is immaterial).
PROBLEM 4

Action Trainers provides a personalized training program that is popular with many companies. The number of
programs offered over the last five months, and the costs of offering these programs are as follows:

Programs Offered Costs Incurred


Jan 55 $15,400
Feb 45 14,050
Mar 60 18,000
April 50 14,700
May 75 19,000

a. Using the high-low method, compute the variable cost per program and the total fixed cost
per month.
b. Using the least squares regression method, compute the variable cost per program and the
total fixed cost per month.

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