AOTal No Spai.... Heading1 Heading 2 Title Subtitle Paragraph Styles 2. A local

Question

AOTal No Spai.... Heading1 Heading 2 Title Subtitle Paragraph Styles 2. A local restaurant has developed the following cost estimation equation, where X-the number of customers served: Overhead costs- $7,790 a. At the beginnin $1.33X g of the year, they had predicted they would serve 43,225 customers. Calculate the predicted overhead for the year. b. Determine the predetermined overhead rate per customer served Sales turned out to be higher than anticipated. At the end of the year, theyhad served47,853 customers. over the year, they had accumulated $68,000 in overhead costs. Determine the under or overapplied overhead at the end of the year. c.

Explanation / Answer

A. Predicted overhead for the year:

=$7,790+$1.33×43,225 customers

=$65,279.25

B.

Predetermined overhead rate=estimated overhead/estimated customers

=$65,279.25/43,225

=$1.51 per customer

C. Applied overhead(if rounded)=$1.51×$47,853=$72,258

Applied overhead( if not rounded)=$72,269

Actual overhead=$68,000

Over applied overhead=$4258 or $4269 (if not rounded)

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