60.1K

Verified Solution

Link Copied!

Lassie, Co$.$ manufacturers premium dog furniture such as $4-$poster beds and chaise lounges. In preparing their annual budgets for $2022,$ Lassie Co$.$ had estimated the following:Sales Units$4,500,000$Production Units$4,350,000$Direct Labor Hours$2,675,000$Machine Hours$1,430,000$Direct Materials Cost$$10,680,000$Direct Labor Cost$$15,698,000$Manufacturing OH$$8,693,750$Selling & Admin. Cost$$16,345,000$ Though it is currently trying to automate its manufacturing process, Lassie currently uses a traditional costing system and computes a predetermined overhead rate based on estimated direct labor hours and applies this rate to all production.Required:$1.$ Determine Lassies OH application rate for January $2022$ and for February $2022\mathrm{.}2.$ Assume the following occurred in January $2022$ and February $2022($actual results$)$: January $2022$February $2022$Sales Units$240,000390,000$Production Units$280,000370,000$Direct Labor Hours$185,000225,000$Machine Hours$98,000122,000$Direct Materials Cost$$770,000$$$935,000$Direct Labor Cost$$1,100,000$$$1,542,000$Manufacturing OH$$642,000$$$714,000$Selling & Admin. Cost$$1,015,000$$$1,418,000$ a$.$ Determine the amount of manufacturing OH applied in January.b$.$ In January, was manufacturing OH under or over applied? By how much?c$.$ Determine the amount of manufacturing OH applied in February.d$.$ In February, was manufacturing OH under or over applied? By how much?$3.$ What was the production cost per unit produced in January? In February?$4.$ Why do companies use a predetermined manufacturing overhead rate applied to production each month rather than just adding in the actual manufacturing overhead costs each month?

Answer & Explanation Solved by verified expert

See Answer