Purchase Solution

Cost of unused capacity

Not what you're looking for?

Ask Custom Question

Question 9:

(Appendix 3A) At the beginning of the current year, Garber Corporation estimated that its manufacturing overhead would be $532,000 and the activity level would be 23,000 machine-hours. The level of activity at capacity is 40,000 machine-hours. The actual manufacturing overhead for the year was $504,900 and the actual level of activity was 23,100 machine-hours.

Assume for the purposes of this question only that the actual manufacturing overhead for the year was $532,000 and was entirely fixed. If the company bases its predetermined overhead rate on machine-hours at capacity, then the cost of unused capacity reported on the income statement would have been:

$16,900

$224,770

$201,670

$219,430

Purchase this Solution
Solution Summary

The solution explains how to calculate the cost of unused capacity

Solution Preview

We first calculate the predetermined overhead rate based on machine hours are ...

Purchase this Solution
Free BrainMass Quizzes
Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

View More Free Quizzes
Related BrainMass Solutions

  • Cost Accounting: Systems Integrators Inc. Activities

    If the unused capacity is temorary is nature, managers can see what other activities can be done so as to use the unused capacity productively The solution determines the cost accounting for Systems Integrators Inc. activities.

  • Potras Co & Garber: cost of raw material, unused capacity

    Thanks Show how to work out the cost of raw material and cost of unused capacity

  • Differential cost

    If 15,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it A business is operating

  • Make vs. Buy Decision

    Division 6 has unused capacity and can produce the materials needed by Division 3 at a variable cost of $3 per unit.

  • Minimum transfer price to second division

    For unused capacity, only variable manufacturing cost is relevant as there is no variable selling cost.

  • Cash flows

    Due to capacity constraints, additional output is not planned. 2. The project was initiated to replace unusable machinery, which initially cost $125,000. 3. Additional factory space is required. Current unused space is available.

  • Sycamore Company uses a certain part in its manufacturing pr

    After performing a capacity analysis, Sycamore determined that it has sufficient unused capacity to manufacture the 14,400 parts but would need to hire a manager at an annual salary of $43,200 to oversee this production activity.

  • Garber Company: Compute cost driver rates, and ABC costing

    Using the information and activity cost driver rates developed in B, determine the cost assignend to each of the activities and estimated hours of unused capacity as well as the associated cost.

  • Donkey Bikes - Incremental Analysis

    Donkey currently has unused productive capacity that is expected to continue indefinitely; management has concluded that some of this capacity can be used to assemble the bikes and sell them at $450 each.

View More Related Solutions