3.13
Accounting for manufacturing overhead. (15 min)
1 Budgeted manufacturing overhead rate
€7,000,000 ÷ 200,000 = €35 per machine-hour
2 Work in progress control
€6,825,000 Manufacturing overhead allocated
€6,825,000
(195,000 machine-hours ÷ €35 = €6,825,000)
3 €6,825,000 – €6,800,000 = €25,000 overallocated, an insignificant amount Manufacturing overhead allocated
€6,825,000 Manufacturing department overhead control
€6,800,000 Cost of goods sold
€25,000
3.14
Proration of overhead. (20 min)
1 Budgeted manufacturing overhead rate is €4,800,000 ÷ 80,000 = €60 per machine- hour.
2 Manufacturing overhead underallocated = manufacturing overhead incurred – manufacturing overhead allocated
= €4,900,000 – €4,500,000*
= €400,000
* €60 × 75,000 actual machine-hours = €4,500,000.
Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5 th Edition, Instructor’s Manual © Pearson Education Limited 2012 Share with your friends: |
