Kramer Company Has Decided to Use a Predetermined Rate to Assign

question 77

Essay

Kramer Company has decided to use a predetermined rate to assign factory overhead to production. The following predictions have been made for 2004:
Required:

a.
Compute the predetermined factory overhead rate under three different bases: (1) direct labour hours, (2) direct labour costs, and (3) machine hours.
b.
Assume that actual factory overhead was £152,500 and that Kramer elected to apply factory overhead to Work in Process based on direct labour hours. If actual direct labour was 42,000 hours for 2004, was factory overhead overapplied or underapplied? By how much?

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Definitions:

Linear Perspective

A technique in art and drawing that creates the illusion of depth on a flat surface by converging parallel lines towards a single point on the horizon.

Biopsychosocial Approach

A holistic perspective that acknowledges that biological, psychological (which includes emotions, thoughts, behaviors), and social (societal and environmental) factors all play a significant role in human functioning in the context of disease or illness.

Parapsychology

The study of psychic phenomena and other paranormal claims, which are often outside the realm of conventional psychology.

Gestalt Principles

A theory in psychology that proposes objects are viewed holistically rather than as a sum of their parts.