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Overhead Allocation, Delivery Expense, Responsibility Accounting

1. If the predetermined overhead allocation rate is 85% of direct labor cost, and the Polishing Department's direct labor cost for the reporting period is $20,000, the following entry would be made to record the allocation of overhead to the products processed in this department:

Factory Overhead 17,000
Goods in Process Inventory, Painting Dept 17,000

True/False

2. A company has two departments, A and B, that incur delivery expenses. An analysis of the total delivery expense of $9,000 indicates that Dept. A had a direct expense of $1,000 for deliveries. None of the $9,000 is a direct expense to Dept. B. The analysis also indicates that 60% of regular delivery requests originate in Dept. A and 40% in Dept. B. The delivery expenses that should be charged to Dept. A and Dept. B, respectively, are

A B
A. 4,500 4,500
B. 5,800 3,200
C. 5,500 3,500
D. 5,500 4,500
E. 5,400 3,600

3. A responsibility accounting report that compares actual costs and expenses for a department with the budgeted amounts is called a(n):

A. Performance Report
B. Service Report
C. Income Statement
D. Balance Sheet
E. Cost Report

Solution Preview

1. If the predetermined overhead allocation rate is 85% of direct labor cost, and the Polishing Department's direct labor cost for the reporting period is $20,000, the following entry would be made to record the allocation of overhead to the products processed in this department:

Factory Overhead ...

Solution Summary

The following response provides the steps to compute the overhead allocation.

$2.19