Example #2 (Chapter 2): ABC Company has two manufacturing departments - Forming and Finishing. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Estimated total machine-hours (MHs) Estimated total fixed manufacturing overhead cost Estimated variable manufacturing overhead cost per MH. Forming 7,000 A) $6.62 B) $4.87 C) $4.10 D) $7.10 $40,600 $1.30 Finishing 3,000 $8,100 $2.80 Total 10,000 $48,700 Assume the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. That predetermined manufacturing overhead rate is closest to:
Example #2 (Chapter 2): ABC Company has two manufacturing departments - Forming and Finishing. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Estimated total machine-hours (MHs) Estimated total fixed manufacturing overhead cost Estimated variable manufacturing overhead cost per MH. Forming 7,000 A) $6.62 B) $4.87 C) $4.10 D) $7.10 $40,600 $1.30 Finishing 3,000 $8,100 $2.80 Total 10,000 $48,700 Assume the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. That predetermined manufacturing overhead rate is closest to:
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 11E: Ripley, Inc., costs products using a normal costing system. The following data are available for...
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Example #2 (Chapter 2):
ABC Company has two manufacturing departments - Forming and Finishing. The company used the following data at the
beginning of the year to calculate predetermined overhead rates:
Estimated total machine-hours (MHS)
Estimated total fixed manufacturing overhead cost
Estimated variable manufacturing overhead cost per MH.
Assume the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. That
predetermined manufacturing overhead rate is closest to:
A) $6.62
B) $4.87
C) $4.10
D) $7.10
Forming
7,000
$40,600
$1.30
Finishing
3,000
$8,100
$2.80
Total
10,000
$48,700
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