Cadburn Corp

question 35

Essay

Cadburn Corp.uses a job order costing system with manufacturing overhead applied to products on the basis of direct labor hours.For the upcoming year,Cadburn Corp.estimated total manufacturing overhead cost at $250,000 and total direct labor hours of 50,000.During the year actual manufacturing overhead incurred was $262,500 and 51,000 direct labor hours were used.
a.Calculate the predetermined overhead rate.
b.Calculate how much manufacturing overhead will be applied to production.
c.Is overhead over- or underapplied? By how much?
d.What account should be adjusted for over- or underapplied overhead? Should the balance be increased or decreased?

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Definitions:

Production Possibility Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs and production technology.

Efficient Allocation

The optimal distribution of resources among competing uses to maximize output or welfare.

Ppf (Production Possibility Frontier)

A curve depicting all maximum output possibilities for two goods, given a set of inputs and technology, when resources are fully and efficiently utilized.

Efficiently

Achieving maximum productivity with minimum wasted effort or expense.