Pick the best answer that applies Jones Company applies overhead based on direct
ID: 2386528 • Letter: P
Question
Pick the best answer that applies
Jones Company applies overhead based on direct labor hours. At the beginning of the year, Jones estimates Overhead to be 480,000 Dollars, Machine Hours to be 120,000, and Direct Labor to be 80,000. During January, Jones has 6,700 direct labor hours and 11,000 machine hours.
1. What is the predetermined overhead rate?
a. 6 dollars per direct labor hour
b. 40,200 dollars
c. 4 dollars per machine hour
d. 44,000 dollars
e. None of these
2. What is the amount of overhead applied for January?
a. 40,200 dollars
b. 66,000 dollars
c. 44,000 dollars
d. 26,800 dollars
e. 480,000 dollars
3. If the actual overhead for January is 41,000 dollars, what is the overhead variance and is it overapplied or underapplied?
a. 800 dollars underaplied
b. 800 dollars overapplied
c. 3,000 dollars underapplied
d. 3,000 overapplied
e. None of these
Mitchell uses departmental overhead rates. In the assembly department, direct labor hours are used to apply overhead. Machine hours are used to apply overhead in the testing department.
Assembly Dept. Testing Dept. Total
Overhead 570,000 dollars 130,000 dollars 700,000 dollars
Direct labor hours 142,500 hours 32,500 hours 175,000 hours
Machine hours 32,000 hours 65,000 hours 97,000 hours
Mitchell uses departmental overhead rates. In the assembly department, direct labor hours are used to apply overhead. Machine hours are used to apply overhead in the testing department.
Actual data for August is as follows:
Assembly Dept. Testing Dept. Total
Overhead 42,000 dollars 12,000 dollars 54,000 dollars
Direct Labor Hours 13,500 hours 2,430 hours 15,930 hours
Machine Hours 4,020 hours 11,000 hours 15,020 hours
1. If Mitchell uses a plantwide overhead rate based on direct labor hours, instead of departmental rates, what is the predetermined overhead rate rounded to the nearest cent?
a. 5 dollars per direct labor hour
b. 7.22 per machine hour
c. 4 dollars per direct labor hour
d. 2.57 per direct labor hour
e. .52 cents per direct labor hour
2. Using Departmental overhead rates, which of the following is correct?
a. Applied overhead for the assembly department is 54,000 dollars.
b. Applied overhead for the testing department is 4,860.
c. Applied overhead for both departments combined is 63,720 dollars.
d. Overhead for the assembly department is underapplied.
e. None of these
3. Mitchell decides to continue using departmental overhead rates. What are the predetermined rates for the Assembly and Testing departments respectively?
a. Assembly: 4 dollars per direct labor hour; Testing: 2 dollars per machine hour
b. Assembly: 2 dollars per direct labor hour; Testing: 4 dollars per machine hour
c. Assembly: 4 dollars per direct labor hour; Testing: 4 dollars per direct labor hour
d. Assembly: 7.22 per machine hour; Testing: 7.22 per machine hour
e. None of these
4. Mitchell decides to continue using departmental overhead rates. If a job spends 4 hours in assembly and 3 hours in testing, what is the amount of overhead charged to the job?
a. 22 dollars
b. 20 dollars
c. 28 dollars
d. 50.54
e. None of these
Explanation / Answer
Mitchell
Asembly
Test
Over head
570000
130000
700000
Direct labor hours
142500
32500
175000
Machine hours
32000
65000
97000
Predetermined rate
4
2
Manfacturing over head Incurred 41000 Applied 26800 Under applied 14200 41000 41000