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Problem 18: Predetermined Factory Overhead believes that the company would be better if it will use two factory overhead single factory overhead rate that is based on machine hours. Its manager Davao Corp. uses job order costing system to produce its products. It uses a rates, one based on material costs and the other one is based machine hours. The following data are for year 2020: Materials related Factory overhead Machine related Factory overhead Total Budgeted Factory overhead Costs of materials used on jobs Total Machine hours Data related to three jobs worked on in December follow: Material Costs Direct Labor Costs Machine Hours used Job # 1 168,000 128,000 68,000 Budgeted FOH 3,840,000 10,400,000 14,240,000 Job # 2 656,000 104,000 36,000 Job Order Costing 12,800,000 1,600,000 Job # 3 312,000 144,000 23,200 Actual factory overhead related to materials was P318,400 and actual factory overhead related to machine hours was P846,400. Required: 1. Determine the predetermine factory overhead rate based on machine hours, assuming Davao Corp. uses only machine hours to compute the factory overhead applied. 2. Determine the factory overhead applied and total costs of each job. 3. Using two factory overhead rates as suggested by the manager, recomputed requirements 1 and 2.

Problem 18: Predetermined Factory Overhead believes that the company would be better if it will use two factory overhead single factory overhead rate that is based on machine hours. Its manager Davao Corp. uses job order costing system to produce its products. It uses a rates, one based on material costs and the other one is based machine hours. The following data are for year 2020: Materials related Factory overhead Machine related Factory overhead Total Budgeted Factory overhead Costs of materials used on jobs Total Machine hours Data related to three jobs worked on in December follow: Material Costs Direct Labor Costs Machine Hours used Job # 1 168,000 128,000 68,000 Budgeted FOH 3,840,000 10,400,000 14,240,000 Job # 2 656,000 104,000 36,000 Job Order Costing 12,800,000 1,600,000 Job # 3 312,000 144,000 23,200 Actual factory overhead related to materials was P318,400 and actual factory overhead related to machine hours was P846,400. Required: 1. Determine the predetermine factory overhead rate based on machine hours, assuming Davao Corp. uses only machine hours to compute the factory overhead applied. 2. Determine the factory overhead applied and total costs of each job. 3. Using two factory overhead rates as suggested by the manager, recomputed requirements 1 and 2.

College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter26: Manufacturing Accounting: The Job Order Cost System
Section: Chapter Questions
Problem 5SEB: PREDETERMINED FACTORY OVERHEAD RATE Marston Enterprises calculates a predetermined factory overhead...
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Problem 18: Predetermined Factory Overhead believes that the company would be better if it will use two factory overhead single factory overhead rate that is based on machine hours. Its manager Davao Corp. uses job order costing system to produce its products. It uses a rates, one based on material costs and the other one is based machine hours. The following data are for year 2020: Materials related Factory overhead Machine related Factory overhead Total Budgeted Factory overhead Costs of materials used on jobs Total Machine hours Data related to three jobs worked on in December follow: Material Costs Direct Labor Costs Machine Hours used Job # 1 168,000 128,000 68,000 Budgeted FOH 3,840,000 10,400,000 14,240,000 Job # 2 656,000 104,000 36,000 Job Order Costing 12,800,000 1,600,000 Job # 3 312,000 144,000 23,200 Actual factory overhead related to materials was P318,400 and actual factory overhead related to machine hours was P846,400. Required: 1. Determine the predetermine factory overhead rate based on machine hours, assuming Davao Corp. uses only machine hours to compute the factory overhead applied. 2. Determine the factory overhead applied and total costs of each job. 3. Using two factory overhead rates as suggested by the manager, recomputed requirements 1 and 2.
Transcribed Image Text:Problem 18: Predetermined Factory Overhead believes that the company would be better if it will use two factory overhead single factory overhead rate that is based on machine hours. Its manager Davao Corp. uses job order costing system to produce its products. It uses a rates, one based on material costs and the other one is based machine hours. The following data are for year 2020: Materials related Factory overhead Machine related Factory overhead Total Budgeted Factory overhead Costs of materials used on jobs Total Machine hours Data related to three jobs worked on in December follow: Material Costs Direct Labor Costs Machine Hours used Job # 1 168,000 128,000 68,000 Budgeted FOH 3,840,000 10,400,000 14,240,000 Job # 2 656,000 104,000 36,000 Job Order Costing 12,800,000 1,600,000 Job # 3 312,000 144,000 23,200 Actual factory overhead related to materials was P318,400 and actual factory overhead related to machine hours was P846,400. Required: 1. Determine the predetermine factory overhead rate based on machine hours, assuming Davao Corp. uses only machine hours to compute the factory overhead applied. 2. Determine the factory overhead applied and total costs of each job. 3. Using two factory overhead rates as suggested by the manager, recomputed requirements 1 and 2.
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