San Diego State University Operations And Supply Chain Management Assignment Help - Products

Question - Primera Company produces two products and uses a predetermined overhead rate to apply
overhead. Primera currently applies overhead using a plantwide rate based on direct labor
hours. Consideration is being given to the use of departmental overhead rates where overhead
would be applied on the basis of direct labor hours in Department 1 and on the basis of machine
hours in Department 2. At the beginning of the year, the following estimates are provided:
Department 1 Department 2
Direct labor hours 640,000 128,000
Machine hours 16,000 192,000
Overhead cost $384,000 $1,152,000
Actual results reported by department and product during the year are as follows:
Department 1 Department 2
Direct labor hours 627,200 134,400
Machine hours 1 ...Read More 7,600 204,800
Overhead cost $400,000 $1,232,000
Product 1 Product 2
Direct labor hours:
Department 1 480,000 147,200
Department 2 96,000 38,400
Machine hours:
Department 1 8,000 9,600
Department 2 24,800 180,000
Required:
1. Compute the plantwide predetermined overhead rate and calculate the overhead assigned to
each product.
2. Calculate the predetermined departmental overhead rates and calculate the overhead
assigned to each product.
3. Using departmental rates, compute the applied overhead for the year. What is the under- or
overapplied overhead for thefirm?
4. Prepare the journal entry that disposes of the overhead variance calculated in Requirement
3, assuming it is not material in amount. What additional information would you need if
the variance is material to make the appropriate journal entry? ...Read Less

Solution Preview - No Solution Preview Available

Original Question Documents

N/A