2. (6 points) Gonzalez, Inc. manufactures stereo speakers in two factories; one
ID: 2339526 • Letter: 2
Question
2. (6 points) Gonzalez, Inc. manufactures stereo speakers in two factories; one in Vandalia, Illinois and another in Merced, California. The Vandalia factory uses direct labor hours (DLHs) for its overhead rate and the Modesto factory uses machine-hours (MHs) for its overhead rate. Information related to both plants for last year is presented below: Vandalia factory Modesto factory S2,580,000 150,000 MHs Estimated amount of allocation base.. (a Actual amount of allocation base Applied manufacturing overhead.... $4,025,000 $35 per DLH(d) $4,100,000 ... 145,000 MHs S2,600,000 $4,200,000(e) Under or overapplied overhead (indicate the dollar amount and whether it is Required: Fill in the lettered blanks above. SHOW YOUR CALCULATIONS BELOW (For partial credit)!Explanation / Answer
working note:
a.estimated amount of allocation base =estimated manufacturing overhead / predetermined overhead rate
=>$4,025,000 / 35
=>115,000 MHs.
b.Actual amount of allocation base = applied manufacturing overhead / predetermined overhead rate
=>$4,200,000/35
=>120,000 MHs
c.overapplied manufacturing overhead = applied overhead - actual overhead
=>4,200,000-4,100,000
=>$100,000.
d.predetermined overhead rate = estimated manufacturing overhead / estimated amount of allocation base
=>$2,580,000 / 150,000 MHs
=>$17.20.per MH
e.Applied manufacturing overhead = actual amount of allocation base *predetermined overhead rate
=>145,000 * $17.20
=>$2,494,000.
f.under applied overhead = applied manufacturing overhead -actual manufacturing overhead
=>2,494,000 - 2,600,000
=>$106,000.
vandalia factory modesto factory estimated manufacturing overhead 4,025,000 2,580,000 estimated amount of allocation base (a)115,000 150,000 MHs predetermined overhead rate $35 per DLH (d)$17.20 actual amount of allocation base (b)120,000 MHs 145,000 MHs actual manufacturing overhead 4,100,000 2,600,000 applied manufacturing overhead 4,200,000 (e)2,494,000 under or over applied overhead (c)100,000 over (f)106,000 under