The Management of Satellite Corporation Would Like to Investigate the Possibility

question 47

Essay

The management of Satellite Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 13,000 machine-hours. In addition, capacity is 16,000 machine-hours and the actual activity for the year is 12,900 machine-hours. All of the manufacturing overhead is fixed and is $29,120 per year. For simplicity, it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity and the actual amount of manufacturing overhead for the year.
Required:
a. Determine the predetermined overhead rate if the predetermined overhead rate is based on the amount of the allocation base at capacity.
b. Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the amount of the allocation base at capacity.

Understand best practices in personal digital security and privacy.

Describe authentication methods and their importance in securing data.

Understand the fundamentals of accounting consolidation process including the calculation of consolidated retained earnings.

Gain the ability to prepare and interpret consolidated financial statements including comprehensive income and financial position.

---

Definitions:

Downstream Costs

Costs incurred after the production process, including distribution, marketing, and customer service expenses.

Business Process Re-engineering

The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical measures of performance such as cost, quality, service, and speed.

Work Flow

Work Flow is the sequence of processes through which a piece of work passes from initiation to completion, often in a business or manufacturing context.

Process Map

A visual representation of the steps involved in a process, showing how tasks are connected and flow from one to the next.