Plastic Products Company Manufactures Pipes and Applies Manufacturing Costs to Production

question 79

Essay

Plastic Products Company manufactures pipes and applies manufacturing costs to production at a budgeted indirect-cost rate of $12 per direct labor-hour.The following data are obtained from the accounting records for June 2014:
$\begin{array}{lr}\text { Direct materials } & \$ 350,000 \\\text { Direct labor (16,000 hours @ } \$ 11 \text { hour) } & 176,000 \\\text { Indirect labor } & 20,000 \\\text { Plant facility rent } & 100,000 \\\text { Depreciation on plant machinery and equipment } & 40,000 \\\text { Sales commissions } & 50,000 \\\text { Administrative expenses } & 60,000\end{array}$ Required:
a.What actual amount of manufacturing overhead costs was incurred during June 2014?
b.What amount of manufacturing overhead was allocated to all jobs during June 2014?
c.For June 2014,was manufacturing overhead underallocated or overallocated? Explain.

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Definitions:

Regression Technique

A statistical method used to model the relationship between a dependent (target) variable and one or more independent variables.

Linear Trend Line

A straight line that best fits the data points in a scatter plot, showing a linear relationship between variables.

Quadratic Model

A mathematical model in which the relationship between the independent variable and the dependent variable is represented by a second-degree polynomial equation.

Mean Absolute Deviation

The average of the absolute differences between each data point in a set of values and the mean of that set.