Podcast
Questions and Answers
What is used as a cost-allocation base for applying overhead in machining at Enriquez Machine Parts Company?
What is used as a cost-allocation base for applying overhead in machining at Enriquez Machine Parts Company?
Which of the following best describes budgeted overhead application rates?
Which of the following best describes budgeted overhead application rates?
How is total overhead applied to a particular product calculated at Enriquez Machine Parts Company?
How is total overhead applied to a particular product calculated at Enriquez Machine Parts Company?
What would be the overhead applied to a product using 8 machine hours in machining?
What would be the overhead applied to a product using 8 machine hours in machining?
Signup and view all the answers
What cost-allocation base is used for applying overhead in assembly at Enriquez Machine Parts Company?
What cost-allocation base is used for applying overhead in assembly at Enriquez Machine Parts Company?
Signup and view all the answers
Which of the following statements about budgeted overhead application rates is true?
Which of the following statements about budgeted overhead application rates is true?
Signup and view all the answers
What is used to apply overhead based on actual events?
What is used to apply overhead based on actual events?
Signup and view all the answers
In Enriquez Machine Parts Company, what is the single cost-allocation base in the machining department?
In Enriquez Machine Parts Company, what is the single cost-allocation base in the machining department?
Signup and view all the answers
How is total overhead applied to a product calculated?
How is total overhead applied to a product calculated?
Signup and view all the answers
If Enriquez had used 70,000 machine hours in Machining, how much overhead was applied to Machining?
If Enriquez had used 70,000 machine hours in Machining, how much overhead was applied to Machining?
Signup and view all the answers
In Enriquez's Assembly department, how much overhead was applied if $190,000 was incurred in direct labor cost?
In Enriquez's Assembly department, how much overhead was applied if $190,000 was incurred in direct labor cost?
Signup and view all the answers
What is the basis for selecting a cost-allocation method in Enriquez Machine Parts Company?
What is the basis for selecting a cost-allocation method in Enriquez Machine Parts Company?
Signup and view all the answers
What are budgeted overhead application rates?
What are budgeted overhead application rates?
Signup and view all the answers
In the context of overhead application, what does 'budgeted overhead application rate' represent?
In the context of overhead application, what does 'budgeted overhead application rate' represent?
Signup and view all the answers
How is total overhead applied to a specific product calculated?
How is total overhead applied to a specific product calculated?
Signup and view all the answers
What is the purpose of selecting a single cost allocation base in each department for applying overhead?
What is the purpose of selecting a single cost allocation base in each department for applying overhead?
Signup and view all the answers
Why are budgeted overhead rates used in overhead application?
Why are budgeted overhead rates used in overhead application?
Signup and view all the answers
How would you calculate the total overhead applied to a product that uses 5 machine hours and incurs a direct-labor cost of $40?
How would you calculate the total overhead applied to a product that uses 5 machine hours and incurs a direct-labor cost of $40?
Signup and view all the answers
What are budgeted overhead rates used for in a company?
What are budgeted overhead rates used for in a company?
Signup and view all the answers
In the context of Enriquez Machine Parts Company, how is overhead applied to a product?
In the context of Enriquez Machine Parts Company, how is overhead applied to a product?
Signup and view all the answers
For a product using 8 machine hours in machining and incurring a direct labor cost of $60, how much overhead would be applied?
For a product using 8 machine hours in machining and incurring a direct labor cost of $60, how much overhead would be applied?
Signup and view all the answers
If Enriquez Machine Parts Company used 50,000 machine hours in machining, how much overhead would be applied to Machining?
If Enriquez Machine Parts Company used 50,000 machine hours in machining, how much overhead would be applied to Machining?
Signup and view all the answers
What is the key factor used for applying overhead in the assembly department of Enriquez Machine Parts Company?
What is the key factor used for applying overhead in the assembly department of Enriquez Machine Parts Company?
Signup and view all the answers
Suppose Enriquez had incurred $150,000 in direct labor cost. How much overhead would be applied to Assembly?
Suppose Enriquez had incurred $150,000 in direct labor cost. How much overhead would be applied to Assembly?
Signup and view all the answers
What method does Enriquez Machine Parts Company use to allocate overhead in the machining department?
What method does Enriquez Machine Parts Company use to allocate overhead in the machining department?
Signup and view all the answers
In the given scenario, how is total overhead applied to a product calculated?
In the given scenario, how is total overhead applied to a product calculated?
Signup and view all the answers
What is the total overhead applied to a product that uses 8 machine hours in machining and incurs direct-labor cost of $60 in assembly?
What is the total overhead applied to a product that uses 8 machine hours in machining and incurs direct-labor cost of $60 in assembly?
Signup and view all the answers
If Enriquez had used 50,000 machine hours in Machining at the end of the year, how much overhead was applied to Machining?
If Enriquez had used 50,000 machine hours in Machining at the end of the year, how much overhead was applied to Machining?
Signup and view all the answers
How much overhead was applied to Assembly if Enriquez incurred $150,000 in direct labor cost at the end of the year?
How much overhead was applied to Assembly if Enriquez incurred $150,000 in direct labor cost at the end of the year?
Signup and view all the answers
What is the basis for applying overhead in the assembly department at Enriquez Machine Parts Company?
What is the basis for applying overhead in the assembly department at Enriquez Machine Parts Company?
Signup and view all the answers
Study Notes
Budgeted Overhead Application Rates
- Overhead rates are budgeted, meaning they are estimates used to apply overhead based on actual events.
- Budgeted overhead application rate = Total budgeted Factory overhead / Total budgeted Amount of cost driver.
Illustration of Overhead Application
- Enriquez Machine Parts Company uses a single cost-allocation method in each department for applying overhead.
- In machining, the cost-allocation method is machine hours (MH).
- In assembly, the cost-allocation method is direct-labor cost (LC).
- Total overhead applied to a product = Budgeted overhead rates x Actual machine hours (MH) or labor cost (LC) used by that product.
- Example: Apply $44 of overhead to a product that uses 6 MH in machining and incurs direct-labor cost of $40 in assembly.
- Machining: 6 actual MH x $4 per MH = $24
- Assembly: $40 of DL cost x 50% = $20
- Total overhead = $24 + $20 = $44
Application of Overhead to Departments
- If Enriquez had used 70,000 machine hours in Machining, overhead applied to Machining = 70,000 MH x $4 per MH = $280,000.
- If Enriquez had incurred $190,000 in direct labor cost, overhead applied to Assembly = $190,000 x 50% = $95,000.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your knowledge on cost allocation methods for overheads in manufacturing companies. Questions cover topics such as total budgeted rate, amount of cost driver, and selecting cost-allocation base in different departments.
