Use the information below to answer the next 3 questions: At the beginning of the year, JJB...

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Accounting

Use the information below to answer the next 3questions:
At the beginning of the year, JJB Inc. estimated that overheadwould be $880,000 and direct labor hours would be 220,000 hours. Atthe end of the year actual overhead was $920,600 and there wereactual direct labor hours of 230,000. Year ended unadjusted COGS is$2,000,000.
What is the Rredetermined Overhead Rate?
$2.63
$4
$4.18
None of the above
QUESTION 8
What is the overhead variance?
$200 overapplied
$400 underapplied
$600 overapplied
$600 underapplied
QUESTION 9
The adjusted Cost of Goods Sold is:
$2,000,000
$2,000,400
$2,000,600
$1,999,400

Answer & Explanation Solved by verified expert

4.1 Ratings (768 Votes)

Answer:

Predetermined Overhead rate
                 = Estimated Overhead Costs / Estimated Direct Labor Hours
                 =   $ 880,000 / 220,000 hours
                 =    $ 4

Predetermined Overhead rate = $ 4

Option (b) is Correct

Overhead Variance
               =   Actual Overhead (-) Applied Overhead
               =     $ 920,600 (-) [ 230,000 Hours x $ 4 ]
               =      $ 920,600 (-) $ 920,000
               =      $ 600 Underapplied

Overhead Variance = $ 600 Underapplied

Option (d) is Correct

Adjusted Cost of Goods Sold
                  = Unadjusted Cost of Goods Sold + Underapplied Overhead
                  =    $ 2,000,000 + $ 600
                  =    $ 2,000,600

Adjusted Cost of Goods Sold = $ 2,000,600

Option (c ) is Correct

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		$200 overapplied
		$400 underapplied
		$600 overapplied
		$600 underapplied