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Management Accounting: Overhead Absorption & Apportionment

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P 9-3
a. Calculate the Densian Naples plant overhead rate.
b. How much overhead was absorbed to products in the Naples plant?
c. Calculate the Denisan Naples plant's over- or under absorbed overhead.
d. Describe the effect on income when the over- or under abosrbed overhead is written of to cost of goods sold.

P 9-4
a. How would you evaluate MacGiver's annual report in light of this footnote? In particular, how does the footnote affect your recommendation regarding the loan?
b. In preparing for your meeting with MacGiver's president and CFO, what questions would be asked regarding the footnote?

P 9-12
a. Calculate the manufacturing overhead rate used to absorb overhead to golf bags and tennis totes.
b. A batch of tennis totes is produced in May. The batch uses 1,900 hours. How much is the overhead?
C. Calculate the amount of over/under absorbed overhead at the end of the year.
d. Describe what the over/under absorbed overhead means

P 9-24
a. Calculate two overhead rates. One based on machine minutes and the other based on direct labour costs.
b. Calculate the total product cost per batch of plush and deluxe mats using the two overhead rates calculated in (a).
c. Discuss the advantages and disadvantages of using the two different overhead absorption bases.

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Solution Summary

The problem deals with calculating the overhead apportioned to a manufacturing plant, the effect on income for under-absorption and over-absorption of overhead, and the effect of footnotes on loan approvals.

Solution provided by:
Chidi Ngene, M. Sc.
Education
  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
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