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    Elliot Company and Ryan Company

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    18 - 1 Elliot Company estimates that costs of production for the coming year would be:
    Raw materials $75,000
    Direct labor 90,000
    Production overhead 135,000

    a) Calculate the overhead rate for the next year, assuming that it is based on direct labor dollars.
    b) Journalize the entry necessary to show the total cost of production for the month of May if the raw materials put into production totaled $6,000 and direct labor was $6,600.
    c) If actual production overhead costs incurred in May were $9,550, calculate the overabsorbed overhead for the month.

    18 - 2
    The adjusted trial balance of Ryan Corporation includes the following overhead costs that are to be distributed before the books are closed to its three cost centers: A, B, and C.
    Total Building Furniture and Fixtures Machinery and Equipment
    Heat, light, power $40,000
    Depreciation 23,8000 $3,000 $800 $20,000
    Inventories 200
    Other 2,210 1,300 60 580
    Repairs 5,900 4,000 1,900
    Telephone Expense 1,800
    Total 73,910

    Data used for cost distribution follow:
    Cost Center
    A B C
    Cubic feet 600,000 200,000 200,000
    square feet of floor space 48,000 6,000 6,000
    Number of telephone extensions 9 27 9

    Three-fourths of the furniture and fixtures are in Cost Center B and one-fourth is in cost Center C. Half of the inventory is in Cost Center A and half is in Cost Center B. Assume that all building costs except utilities are allocated on the basis of floor space. Utilities are allocated based on cubic feet. All machinery and equipment are in Cost Center A.

    Calculate the amount of cost to be allocated to each cost center.

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    Solution Summary

    Your tutorial is attached, in excel. The schedule is labelled so you can follow the process.