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1. The management of Plitt Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. 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 55,000 machine-hours. Capacity is 76,000 machine-hours and the actual level of activity for the year is assumed to be 71,000 machine-hours. All of the manufacturing overhead is fixed and both the estimated amount at the beginning of the year and the actual amount at the end of the year are assumed to be $2,508,000 per year. It is assumed that a number of jobs were worked on during the year, one of which was Job Q20L which required 410 machine-hours.

Multiple Choice

$13,530.00

$14,482.82

$10,480.99

$18,696.00

2. Daget Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $364,140. At the end of the year, actual direct labor-hours for the year were 24,000 hours, manufacturing overhead for the year was overapplied by $8,060, and the actual manufacturing overhead was $359,140. The predetermined overhead rate for the year must have been closest to:

Multiple Choice

$15.43 per direct labor-hour

$15.30 per direct labor-hour

$15.17 per direct labor-hour

$14.96 per direct labor-hour

3. Braam Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 11,500 hours. At the end of the year, actual direct labor-hours for the year were 9,700 hours, the actual manufacturing overhead for the year was $143,350, and manufacturing overhead for the year was underapplied by $18,220. The estimated manufacturing overhead at the beginning of the year used in the predetermined overhead rate must have been:

Multiple Choice

$164,023

$125,130

$148,350

$138,350

4. Darrow Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 10,000 direct labor-hours and incurred $80,000 of actual manufacturing overhead cost. If overhead was underapplied by $2,000, the predetermined overhead rate for the Corporation for the year must have been:

Multiple Choice

$7.80 per direct labor-hour

$8.00 per direct labor-hour

$8.20 per direct labor-hour

$8.40 per direct labor-hour

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