Managerial Accounting Homework help needed

Posted on 2014-03-31 10:59:00 in Economics by LOLA

Question 1. Cretin Enterprises uses a predetermined overhead rate of $21.40 per direct

labour hour. This predetermined rate was based on a cost formula that estimated $171,200 of

total manufacturing overhead for an estimated activity level of 8,000 direct labour hours. The

company incurred actual total manufacturing overhead costs of $172,500 and 8,250 total

direct labour hours during the period.



Required:

1. Determine the amount of underapplied or overapplied manufacturing overhead for the

period.

2. Assuming that the entire amount of the underapplied or overapplied overhead is

closed out to Cost of Goods Sold, what would be the effect of the underapplied or

overapplied overhead on the company's gross margin for the period?



Help much appreciated!

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