1. Budgeted manufacturing overhead rate = Budgeted manufacturing overhead costs / Budgeted machine-hours

Budgeted manufacturing overhead rate = \$3,800,000 / 200,000

Budgeted manufacturing overhead rate = \$19

2. The manufacturing overhead allocated during 2017 = Actual machine-hours * Budgeted manufacturing overhead rate

Manufacturing overhead allocated = 196,000 * \$19

Manufacturing overhead costs over-allocated = \$3,724,000 - \$3,660,000

Manufacturing overhead costs over-allocated = \$64,000

## Related Questions

Jaymes Corporation produces high-performance rotors. It expects to produce 69,000 rotors in the coming year. It has invested \$8,970,000 to produce rotors. The company has a required return on investment of 20%. What is its ROI per unit

\$26

Explanation:

The computation of the ROI per unit is shown below

Required ROI on the total Investment

= Total Investment × Required Rate on Investment

= \$8,970,000 × 20%

= \$1,794,000

So, ROI Per Unit is

= Required Return on investmnt  ÷ Total Rotors

= \$1,794,000 ÷ 69,000

= \$26

Which of the following is something a company could do to foster bonding and affective commitment? Multiple Choice add dental coverage to its health insurance package
offer incentives to the team with the highest sales
offer college reimbursement for business classes
offer free leadership seminars to all employees
hold a weekly "employee appreciation" party

The correct answer is letter "E": hold a weekly "employee appreciation" party.

Explanation:

Organizational commitment plays a key role in employees' performance. The more engaged workers are with the company they work for, the more likely their production is going to be higher. Affective commitment refers to increasing the bonds that link workers within the organization. Casual reunions after every period of time are one of the many activities firms could use to engage employees with their brand.

Producers believe the economy is headed for a recession, so they reduce their purchases of machinery and equipment. A. The Short Run Aggregate Supply curve shifts to the right.
B. The Aggregate Demand curve shifts to the left.
C. The Aggregate Demand curve shifts to the right.
D. The Short Run Aggregate Supply curve shifts to the left.

A - The Short Run Aggregate Supply curve shifts to the right.

Explanation:

The Short Run Aggregate Supply curve plots aggreagrate price against aggreagrate quantity.

If producers believe a recession is imminent and they reduce the amount of machinery purchased, the quantity supplied would reduce shifting the Short Run Aggregate Supply curve to the left.

Required information Use the following information for the Problems below.
Lansing Company’s 2017 income statement and selected balance sheet data (for current assets and current liabilities) at December 31, 2016 and 2017, follow.

LANSING COMPANY
Income Statement
For Year Ended December 31, 2017
Sales revenue \$ 118,200
Expenses
Cost of goods sold 49,000
Depreciation expense 15,500
Salaries expense 25,000
Rent expense 9,700
Insurance expense 4,500
Interest expense 4,300
Utilities expense 3,500
Net income \$ 6,700

LANSING COMPANY
Selected Balance Sheet Accounts
At December 31 2017 2016
Accounts receivable \$ 6,300 \$ 7,200
Inventory 2,680 1,890
Accounts payable 5,100 6,000
Salaries payable 1,020 770
Utilities payable 360 230
Prepaid insurance 330 420
Prepaid rent 360 250
Problem 16-1A Indirect: Computing cash flows from operations LO P2
Required:
Prepare the cash flows from operating activities section only of the company’s 2017 statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

LANSING COMPANY
Cash Flows from Operating Activities—Indirect Method
For Year Ended December 31, 2017
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operations:

Explanation:

The preparation of the Cash Flows from Operating Activities—Indirect Method is shown below:

Cash flow from Operating activities - Indirect method

Net income                                                                           \$6,700

Add: Decrease in accounts receivable      \$900 (\$6,300 - \$7,200)

Less: Increase in inventory                         -\$790 (\$2,680 - \$1,890)

Less: Decrease in accounts payable         -\$900 (\$5,100 - \$6,000

Add: Increase in salaries payable               \$250 (\$1,020 - \$770)

Add: Increase in utility payable                   \$130 (\$360 - \$230)

Less: Decrease in prepaid insurance         -\$90 (\$330 - \$420

Add: Increase in prepaid rent                      \$110 (\$360 - \$250)

Net Cash flow from Operating activities                                \$21,810

Two investment advisers are comparing performance. One averaged a 19% return and the other a 16% return. However, the beta of the first adviser was 1.5, while that of the second was 1.a. Can you tell which adviser was a better selector of individual stocks (aside from the issue of general movements in the market)?
Cannot be determined

b. If the T-bill rate were 6% and the market return during the period were 14%, which adviser would be the superior stock selector?
Cannot be determined

c. What if the T-bill rate were 3% and the market return 15%?
Cannot be determined

a. Cannot be determined

Explanation:

a. Since all the information is not given in the question so we are not able to give advise. As abnormal return is calculated from subtracting the expected return from the return. But no such information is provided in the question.

b. We know that

Abnormal return = Return - expected return

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

In case of First Investment Advisor:

The return is 19%

And, the expected return equal to

= 6% + 1.5 × (14% - 6%)

= 6% + 1.5 × 8%

= 6% + 12%

= 18%

So abnormal return = 19% - 18% = 1%

In case of Second Investment Advisor:

The return is 16%

And, the expected return equal to

= 6% + 1 × (14% - 6%)

= 6% + 1 × 8%

= 6% + 8%

= 14%

So abnormal return = 16% - 18% = 2%

So, Second Investment Advisor should be accepted as it has high abnormal return then first investment Advisor

c. In case of First Investment Advisor:

The return is 19%

And, the expected return equal to

= 3% + 1.5 × (15% - 3%)

= 3% + 1.5 × 12%

= 3% + 18%

= 21%

So abnormal return = 19% - 21% = -2%

In case of Second Investment Advisor:

The return is 16%

And, the expected return equal to

= 3% + 1 × (15% - 3%)

= 3% + 1 × 12%

= 3% + 12%

= 15%

So abnormal return = 16% - 15% = 1%

So, Second Investment Advisor should be accepted as it has high abnormal return then first investment Advisor

Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of textbooks the company publishes.Activity (Cost) Cost Driver Delux Moderate Economy
Machine maintenance (\$330,000) machine hours 250 750 1,000
Setups (\$630,000) setups 35 20 15
Packing (\$166,000) cartons 10 30 60
Photo development (\$574,000) pictures 4,400 2,400 1,400
Deluxe textbooks are made with the finest quality paper, six-color printing, and many photographs. Moderate texts are made with three colors and a few photographs spread throughout each chapter. Economy books are printed in black and white and include pictures only in chapter openings.

Required:

Sheridan currently allocates all overhead costs based on machine hours. The company produced the following number of books during the prior year:

Deluxe Moderate Economy
50,000 150,000 200,000
Determine the overhead cost per book for each book type.

Deluxe= \$4.25 per book

Moderate= \$4.25 per book

Economy= \$4.25 per book

Explanation:

Giving the following information:

Activity (Cost) Cost Driver Delux Moderate Economy

Machine maintenance (\$330,000) machine hours 250 750 1,000

Setups (\$630,000)

Packing (\$166,000)

Photo development (\$574,000)

First, we need to calculate the total overhead cost:

Total overhead= 330,000 + 630,000 + 166,000 + 574,000= 1,700,000

Now, we can calculate the estimated manufacturing overhead rate to allocate overhead to each book type.

The allocation base is machine-hours.

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 1,700,000/ 2,000= \$850 per machine hour.

Now, we can allocate overhead to each book:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Deluxe= \$850*250hours= \$212,500

Moderate= \$850*750hours= \$637,500

Economy= \$850*1,000= \$850,000

Based on the number of units, we can calculate the unitary overhead:

Deluxe= \$212,500/50,000= \$4.25 per book

Moderate= \$637,500/150,000= \$4.25 per book

Economy= \$850,000/200,000= \$4.25 per book

To determine the overhead cost per book for each type, we first establish the cost per unit/activity (machine hour, setup, carton, picture). Then, we multiply each activity cost by the respective number of activities for each book type. Finally, we divide the total overhead cost by the number of books produced. This method is known as Activity-Based Costing.

### Explanation:

To determine the overhead cost per book for each book type, Activity-Based Costing (ABC) is used. This cost allocation method assigns overhead costs to each activity (or task) involved in the production process and then allocates these costs to the various products based on the volume of each activity they require.

Step 1: Calculate the cost per driver for each activity.

• Machine maintenance cost per machine hour: \$330,000 ÷ 2,000 hours = \$165/hour
• Setups cost per setup: \$630,000 ÷ 70 setups = \$9,000/setup
• Packing cost per carton: \$166,000 ÷ 100 cartons = \$1,660/carton
• Photo development cost per picture: \$574,000 ÷ 8,200 pictures = \$70/picture

Step 2: Calculate the total overhead cost for each book type by multiplying the cost per driver by the number of drivers for each activity.

Step 3: To find the overhead cost per book, divide the total overhead cost by the number of books produced.

From this exercise, it is clear that different products consume overhead resources differently and thus can have different per-unit overhead costs when you move from the traditional cost system to the Activity Based Costing method.