Problem 1: What does it mean when overhead is over-or underapplied? What costs are affected by this and what are the two different ways to adjust for the over- or underapplied amount?
Problem 2: Aster Manufacturing uses the weighted-average method of process costing. The following information was available for the current year:
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Number of units
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Production Costs
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Beginning work-in-process (90% complete)
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100,000
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$ 540,000
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Current period production
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1,500,000
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9,036,000
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Ending work-in-process (90% complete)
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40,000
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Required:
A. How many total equivalent units were completed during the year?
B. What was the cost per equivalent unit?
C. What is the cost allocated to the ending work-in-process units?
D. What is cost of goods manufactured for the year?
Problem 3:
Triangle Catering assigns overhead to specific jobs based on direct labor hours. At the beginning of the current year, estimated overhead costs were $500,000 and estimated direct labor hours were 40,000. By the end of the year, actual overhead costs were calculated to be $525,000 and actual direct labor hours were 45,000.
Required:
A. Calculate the predetermined overhead rate.
B. How much overhead would be applied to a particular catering job that required 15 direct labor hours?
C. How much total overhead was applied during the year?
D. By how much was overhead over- or underapplied for the year? Be sure to indicate whether it was over- or underapplied.