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    Predetermined Overhead Rate

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    Equations and theories behind solving for overhead for companies

    Tortolla Company is a manufacturing firm that uses a job-order costing system. The company
    uses machine hours to apply overhead to work in process. On January 1, Tortolla's
    management estimated that it would incur $700,000 in manufacturing overhead costs and
    56,000 machine hours over the coming year.

    A. Compute the company's predetermined overhead rate for the year.

    B. Assume that the company uses only 54,000 machine hours over the year and incurs the
    following manufacturing costs:

    Maintenance $56,000
    Depreciation $206,000
    Indirect Materials $76,000
    Utilities $164,000
    Insurance $94,000
    Indirect Labor $64,000

    Compute the amount of overhead that was applied to production and the amount of over-or
    under applied overhead for the period.

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    https://brainmass.com/business/accounting/predetermined-overhead-rate-48174

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    Tortolla Company is a manufacturing firm that uses a job-order costing system. The company
    uses machine hours to apply overhead to work in process. On January 1, Tortolla's
    management estimated that it would incur $700,000 in manufacturing overhead costs and
    56,000 machine hours over the coming year.

    A. Compute the company's predetermined ...

    Solution Summary

    This explains the computation of Predetermined overhead rate through a case study.

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