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Student name:__________
1) The management of Michaeli Corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity rather than on the estimated
amount of activity for the year. The company’s controller has provided an example to illustrate
how this new system would work.
Estimated activity for the upcoming year 43,000 machine-hours
Capacity 50,000 machine-hours
Actual activity for the year 45,400 machine-hours
Manufacturing overhead (all fixed) $ 989,000 per year
Required:
Determine the cost of unused capacity for the year if the predetermined overhead rate is based
on activity at capacity.
2) The management of Michaeli Corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity rather than on the estimated
amount of activity for the year. The company’s controller has provided an example to illustrate
how this new system would work.
Estimated activity for the upcoming year 45,000 machine-hours
Capacity 53,000 machine-hours
Actual activity for the year 47,000 machine-hours
Manufacturing overhead (all fixed) $ 1,208,400 per year
Required:
Determine the cost of unused capacity for the year if the predetermined overhead rate is based
on activity at capacity.
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3) Marder Woodworking Corporation produces fine cabinets. The company uses a job-order
costing system in which its predetermined overhead rate is based on capacity. The capacity of the
factory is determined by the capacity of its constraint, which is an automated jointer. Additional
information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 24,500
Capacity of the jointer 250 hours
Actual results:
Sales $ 71,706
Direct materials $ 12,500
Direct labor $ 17,900
Actual total fixed manufacturing overhead $ 24,500
Selling and administrative expense $ 9,700
Actual hours of jointer use 200 hours
Required:
a. Calculate the predetermined overhead rate based on capacity.
b. Calculate the manufacturing overhead applied.
c. Determine the Gross Margin for the month.
d. Calculate the cost of unused capacity.
4) Knipple Woodworking Corporation produces fine cabinets. The company uses a job-
order costing system in which its predetermined overhead rate is based on capacity. The capacity
of the factory is determined by the capacity of its constraint, which is an automated bandsaw.
Additional information is provided below for the most recent month:
Estimates at the beginning of the month:
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Estimated total fixed manufacturing overhead $ 24,288
Capacity of the bandsaw 240 hours
Actual results:
Sales $ 71,473
Direct materials $ 10,400
Direct labor $ 17,300
Actual total fixed manufacturing overhead $ 24,288
Selling and administrative expense $ 9,100
Actual hours of bandsaw use 230 hours
Required:
Prepare an income statement following the Example in Appendix 2B in which any cost of
unused capacity is directly recorded on the income statement as a period expense.
5) Danaher Woodworking Corporation produces fine furniture. The company uses a job-
order costing system in which its predetermined overhead rate is based on capacity. The capacity
of the factory is determined by the capacity of its constraint, which is an automated lathe.
Additional information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 22,701
Capacity of the lathe 230 hours
Actual results:
Actual total fixed manufacturing overhead $ 22,701
Actual hours of lathe use 210 hours
Required:
a. Calculate the predetermined overhead rate based on capacity.
b. Calculate the manufacturing overhead applied.
c. Calculate the cost of unused capacity.
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6) Danaher Woodworking Corporation produces fine furniture. The company uses a job-
order costing system in which its predetermined overhead rate is based on capacity. The capacity
of the factory is determined by the capacity of its constraint, which is an automated lathe.
Additional information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 21,870
Capacity of the lathe 270 hours
Actual results:
Actual total fixed manufacturing overhead $ 21,870
Actual hours of lathe use 240 hours
Required:
a. Calculate the predetermined overhead rate based on capacity.
b. Calculate the manufacturing overhead applied.
c. Calculate the cost of unused capacity.
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7) The management of Kotek Corporation would like to investigate the possibility of basing
its predetermined overhead rate on activity at capacity rather than on the estimated amount of
activity for the year. 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 8,000 machine-hours. In addition,
capacity is 10,000 machine-hours and the actual activity for the year is 8,700 machine-hours. All
of the manufacturing overhead is fixed and is $6,400 per year. Job L77S, which required 220
machine-hours, is one of the jobs worked on during the year.
Required:
a. Determine the predetermined overhead rate if the predetermined overhead rate is based on
activity at capacity.
b. Determine how much overhead would be applied to Job L77S if the predetermined overhead
rate is based on activity at capacity.
c. Determine the cost of unused capacity for the year if the predetermined overhead rate is
based on activity at capacity.
8) The management of Schneiter Corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity rather than on the estimated
amount of activity for the year. 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 42,000 machine-hours. In
addition, capacity is 46,000 machine-hours and the actual activity for the year is 43,000
machine-hours. All of the manufacturing overhead is fixed and is $734,160 per year.
Required:
a. Determine the predetermined overhead rate if the predetermined overhead rate is based on
activity at capacity.
b. Determine the cost of unused capacity for the year if the predetermined overhead rate is
based on activity at capacity.
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9) The management of Bouyer Corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity rather than on the estimated
amount of activity for the year. 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 34,000 machine-hours. In
addition, capacity is 37,000 machine-hours and the actual activity for the year is 34,700
machine-hours. All of the manufacturing overhead is fixed and is $377,400 per year.
Required:
Determine the cost of unused capacity for the year if the predetermined overhead rate is based
on activity at capacity.
10) The management of Buelow Corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity rather than on the estimated
amount of activity for the year. The company’s controller has provided an example to illustrate
how this new system would work.
Estimated activity for the upcoming year 76,000 machine-hours
Capacity 94,000 machine-hours
Actual activity for the year 82,800 machine-hours
Manufacturing overhead (all fixed) $ 5,572,320 per year
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Job Q58A, which required 130 machine-hours, is one of the jobs worked on during the year.
Required:
a. Determine the predetermined overhead rate if the predetermined overhead rate is based on
the estimated activity for the upcoming year.
b. Determine how much overhead would be applied to Job Q58A if the predetermined
overhead rate is based on estimated activity for the upcoming year.
c. Determine the predetermined overhead rate if the predetermined overhead rate is based on
the activity at capacity.
d. Determine how much overhead would be applied to Job Q58A if the predetermined
overhead rate is based on activity at capacity.
e. Determine the cost of unused capacity for the year if the predetermined overhead rate is
based on activity at capacity.
Garrison 16e Rechecks 2019-01-30
11) The management of Wrights Corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity rather than on the estimated
amount of activity for the year. The company’s controller has provided an example to illustrate
how this new system would work.
Estimated activity for the upcoming year 15,000 machine-hours
Capacity 18,000 machine-hours
Actual activity for the year 15,800 machine-hours
Manufacturing overhead (all fixed) $ 43,200 per year
Required:
a. Determine the predetermined overhead rate if the predetermined overhead rate is based on
the estimated activity for the upcoming year.
b. Determine the cost of unused capacity for the year if the predetermined overhead rate is
based on activity at capacity.
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12) Risser Woodworking Corporation produces fine cabinets. The company uses a job-order
costing system in which its predetermined overhead rate is based on capacity. The capacity of the
factory is determined by the capacity of its constraint, which is an automated jointer. Additional
information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 16,120
Capacity of the jointer 310 hours
Actual results:
Sales $ 60,800
Direct materials $ 16,600
Direct labor $ 14,600
Actual total fixed manufacturing overhead $ 16,120
Selling and administrative expense $ 10,900
Actual hours of jointer use 270 hours
The gross margin that would be reported on the income statement prepared for internal
management purposes would be closest to:
A) $4,660
B) $15,560
C) $26,460
D) $60,800
13) Risser Woodworking Corporation produces fine cabinets. The company uses a job-order
costing system in which its predetermined overhead rate is based on capacity. The capacity of the
factory is determined by the capacity of its constraint, which is an automated jointer. Additional
information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 14,256
Capacity of the jointer 240 hours
Actual results:
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Sales $ 62,310
Direct materials $ 14,100
Direct labor $ 16,000
Actual total fixed manufacturing overhead $ 14,256
Selling and administrative expense $ 8,900
Actual hours of jointer use 220 hours
The gross margin that would be reported on the income statement prepared for internal
management purposes would be closest to:
A) $10,242
B) $19,142
C) $17,954
D) $62,310
14) The management of Garn Corporation would like to investigate the possibility of basing
its predetermined overhead rate on activity at capacity rather than on the estimated activity for
the coming year. The Corporation’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
activity for the upcoming year is 55,800 machine-hours. Capacity is 71,800 machine-hours. All
of the manufacturing overhead is fixed and is $3,733,600 per year within the range of 55,800 to
71,800 machine-hours. If the Corporation bases its predetermined overhead rate on capacity but
the actual level of activity for the year turns out to be 56,600 machine-hours, the cost of unused
capacity shown on the income statement prepared for internal management purposes would be
closest to:
A) $52,772
B) $843,172
C) $790,400
D) $53,528
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15) The management of Garn Corporation would like to investigate the possibility of basing
its predetermined overhead rate on activity at capacity rather than on the estimated activity for
the coming year. The Corporation’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
activity for the upcoming year is 69,000 machine-hours. Capacity is 85,000 machine-hours. All
of the manufacturing overhead is fixed and is $4,105,500 per year within the range of 69,000 to
85,000 machine-hours. If the Corporation bases its predetermined overhead rate on capacity but
the actual level of activity for the year turns out to be 69,700 machine-hours, the cost of unused
capacity shown on the income statement prepared for internal management purposes would be
closest to:
A) $772,800
B) $780,640
C) $738,990
D) $41,650
16) The management of Krach 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 23,000
machine-hours. Capacity is 26,000 machine-hours and the actual level of activity for the year is
assumed to be 13,000 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 $65,000 per year. For simplicity, it is assumed that this is the estimated
manufacturing overhead for the year as well as the manufacturing overhead at capacity. It is
further assumed that this is also the actual amount of manufacturing overhead for the year.
If the company bases its predetermined overhead rate on capacity, what would be the cost of
unused capacity reported on the income statement prepared for internal management purposes?
A) $3,000
B) $32,500
C) $25,000
D) $57,500
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17) The management of Krach 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 10,000
machine-hours. Capacity is 12,000 machine-hours and the actual level of activity for the year is
assumed to be 9,500 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 $12,000 per year. For simplicity, it is assumed that this is the estimated
manufacturing overhead for the year as well as the manufacturing overhead at capacity. It is
further assumed that this is also the actual amount of manufacturing overhead for the year.
If the company bases its predetermined overhead rate on capacity, what would be the cost of
unused capacity reported on the income statement prepared for internal management purposes?
A) $2,000
B) $2,500
C) $1,900
D) $600
18) The management of Winterroth Corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity. The Corporation’s controller has
provided an example to illustrate how this new system would work. In this example, the
allocation base is machine-hours.
Estimated at the Beginning of the Year Capacity Actual
Machine-hours 48,000 58,000 44,000
Manufacturing overhead $ 1,832,800 $ 1,832,800 $
1,832,800
If the Corporation bases its predetermined overhead rate on capacity, then as shown on the
income statement prepared for internal management purposes, the cost of unused capacity would
be closest to:
A) $316,000
B) $442,400
C) $150,000
D) $152,733
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19) The management of Winterroth Corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity. The Corporation’s controller has
provided an example to illustrate how this new system would work. In this example, the
allocation base is machine-hours.
Estimated at the Beginning of the Year Capacity Actual
Machine-hours 53,000 63,000 49,000
Manufacturing overhead $ 1,803,060 $ 1,803,060 $
1,803,060
If the Corporation bases its predetermined overhead rate on capacity, then as shown on the
income statement prepared for internal management purposes, the cost of unused capacity would
be closest to:
A) $286,200
B) $400,680
C) $264,600
D) $136,080
20) Dowty Woodworking Corporation produces fine cabinets. The company uses a job-order
costing system in which its predetermined overhead rate is based on capacity. The capacity of the
factory is determined by the capacity of its constraint, which is an automated lathe. Additional
information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 19,964
Capacity of the lathe 280 hours
Actual results:
Actual total fixed manufacturing overhead $ 19,964
Actual hours of lathe use 230 hours
The manufacturing overhead applied is closest to:
A) $19,964
B) $16,399
C) $7,639
D) $9,300
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21) Rapier Woodworking Corporation produces fine cabinets. The company uses a job-order
costing system in which its predetermined overhead rate is based on capacity. The capacity of the
factory is determined by the capacity of its constraint, which is an automated jointer. Additional
information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 3,496
Capacity of the jointer 190 hours
Actual results:
Actual total fixed manufacturing overhead $ 3,496
Actual hours of jointer use 160 hours
The predetermined overhead rate based on hours at capacity is closest to:
A) $59.35 per hour
B) $50.10 per hour
C) $21.85 per hour
D) $18.40 per hour
22) Rapier Woodworking Corporation produces fine cabinets. The company uses a job-order
costing system in which its predetermined overhead rate is based on capacity. The capacity of the
factory is determined by the capacity of its constraint, which is an automated jointer. Additional
information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 3,740
Capacity of the jointer 200 hours
Actual results:
Actual total fixed manufacturing overhead $ 3,740
Actual hours of jointer use 170 hours
The predetermined overhead rate based on hours at capacity is closest to:
A) $58.24 per hour
B) $49.50 per hour
C) $22.00 per hour
D) $18.70 per hour
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23) Traeger Woodworking Corporation produces fine cabinets. The company uses a job-
order costing system in which its predetermined overhead rate is based on capacity. The capacity
of the factory is determined by the capacity of its constraint, which is an automated bandsaw.
Additional information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 26,460
Capacity of the bandsaw 350 hours
Actual results:
Actual total fixed manufacturing overhead $ 26,460
Actual hours of bandsaw use 330 hours
The cost of unused capacity that would be reported as a period expense on the income statement
prepared for internal management purposes would be closest to:
A) $1,512
B) $13,608
C) $0
D) $15,120
24) Traeger Woodworking Corporation produces fine cabinets. The company uses a job-
order costing system in which its predetermined overhead rate is based on capacity. The capacity
of the factory is determined by the capacity of its constraint, which is an automated bandsaw.
Additional information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 26,936
Capacity of the bandsaw 280 hours
Actual results:
Actual total fixed manufacturing overhead $ 26,936
Actual hours of bandsaw use 260 hours
The cost of unused capacity that would be reported as a period expense on the income statement
prepared for internal management purposes would be closest to:
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A) $1,924
B) $18,136
C) $0
D) $18,765
25) Mausser Woodworking Corporation produces fine cabinets. The company uses a job-
order costing system in which its predetermined overhead rate is based on capacity. The capacity
of the factory is determined by the capacity of its constraint, which is an automated jointer.
Additional information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 10,040
Capacity of the jointer 200 hours
Actual results:
Sales $ 75,300
Direct materials $ 12,650
Direct labor $ 12,800
Actual total fixed manufacturing overhead $ 10,040
Selling and administrative expense $ 9,500
Actual hours of jointer use 170 hours
The cost of unused capacity that would be reported as a period expense on the income statement
prepared for internal management purposes would be closest to:
A) $0
B) $540
C) $1,506
D) $2,046
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26) Mausser Woodworking Corporation produces fine cabinets. The company uses a job-
order costing system in which its predetermined overhead rate is based on capacity. The capacity
of the factory is determined by the capacity of its constraint, which is an automated jointer.
Additional information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 11,648
Capacity of the jointer 280 hours
Actual results:
Sales $ 52,760
Direct materials $ 13,300
Direct labor $ 16,000
Actual total fixed manufacturing overhead $ 11,648
Selling and administrative expense $ 9,300
Actual hours of jointer use 260 hours
The cost of unused capacity that would be reported as a period expense on the income statement
prepared for internal management purposes would be closest to:
A) $0
B) $2,348
C) $832
D) $3,012
27) Mausser Woodworking Corporation produces fine cabinets. The company uses a job-
order costing system in which its predetermined overhead rate is based on capacity. The capacity
of the factory is determined by the capacity of its constraint, which is an automated jointer.
Additional information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 11,648
Capacity of the jointer 280 hours
Actual results:
Sales $ 52,760
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Direct materials $ 13,300
Direct labor $ 16,000
Actual total fixed manufacturing overhead $ 11,648
Selling and administrative expense $ 9,300
Actual hours of jointer use 260 hours
The gross margin that would be reported on the income statement prepared for internal
management purposes would be closest to:
A) $52,760
B) $3,344
C) $12,644
D) $11,812
28) Coble Woodworking Corporation produces fine cabinets. The company uses a job-order
costing system in which its predetermined overhead rate is based on capacity. The capacity of the
factory is determined by the capacity of its constraint, which is an automated shaper. Additional
information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 33,075
Capacity of the shaper 270 hours
Actual results:
Sales $ 79,268
Direct materials $ 12,200
Direct labor $ 17,400
Actual total fixed manufacturing overhead $ 33,075
Selling and administrative expense $ 8,100
Actual hours of shaper use 250 hours
The predetermined overhead rate based on hours at capacity is closest to:
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A) $30.00 per hour
B) $122.50 per hour
C) $32.40 per hour
D) $132.30 per hour
29) Coble Woodworking Corporation produces fine cabinets. The company uses a job-order
costing system in which its predetermined overhead rate is based on capacity. The capacity of the
factory is determined by the capacity of its constraint, which is an automated shaper. Additional
information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 66,880
Capacity of the shaper 380 hours
Actual results:
Sales $ 115,000
Direct materials $ 11,400
Direct labor $ 16,200
Actual total fixed manufacturing overhead $ 66,880
Selling and administrative expense $ 4,900
Actual hours of shaper use 360 hours
The manufacturing overhead applied is closest to:
A) $6,053
B) $66,880
C) $4,900
D) $63,360
30) Coble Woodworking Corporation produces fine cabinets. The company uses a job-order
costing system in which its predetermined overhead rate is based on capacity. The capacity of the
factory is determined by the capacity of its constraint, which is an automated shaper. Additional
information is provided below for the most recent month:
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Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 33,075
Capacity of the shaper 270 hours
Actual results:
Sales $ 79,268
Direct materials $ 12,200
Direct labor $ 17,400
Actual total fixed manufacturing overhead $ 33,075
Selling and administrative expense $ 8,100
Actual hours of shaper use 250 hours
The manufacturing overhead applied is closest to:
A) $7,500
B) $33,075
C) $8,100
D) $30,625
31) Coble Woodworking Corporation produces fine cabinets. The company uses a job-order
costing system in which its predetermined overhead rate is based on capacity. The capacity of the
factory is determined by the capacity of its constraint, which is an automated shaper. Additional
information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 32,240
Capacity of the shaper 310 hours
Actual results:
Sales $ 92,000
Direct materials $ 11,900
Direct labor $ 16,900
Actual total fixed manufacturing overhead $ 32,240
Selling and administrative expense $ 5,900
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Actual hours of shaper use 290 hours
The cost of unused capacity that would be reported as a period expense on the income statement
prepared for internal management purposes would be closest to:
A) $2,080
B) $0
C) $26,340
D) $32,240
32) Coble Woodworking Corporation produces fine cabinets. The company uses a job-order
costing system in which its predetermined overhead rate is based on capacity. The capacity of the
factory is determined by the capacity of its constraint, which is an automated shaper. Additional
information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 33,075
Capacity of the shaper 270 hours
Actual results:
Sales $ 79,268
Direct materials $ 12,200
Direct labor $ 17,400
Actual total fixed manufacturing overhead $ 33,075
Selling and administrative expense $ 8,100
Actual hours of shaper use 250 hours
The cost of unused capacity that would be reported as a period expense on the income statement
prepared for internal management purposes would be closest to:
A) $2,450
B) $0
C) $24,975
D) $25,575
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33) Coble Woodworking Corporation produces fine cabinets. The company uses a job-order
costing system in which its predetermined overhead rate is based on capacity. The capacity of the
factory is determined by the capacity of its constraint, which is an automated shaper. Additional
information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 43,470
Capacity of the shaper 270 hours
Actual results:
Sales $ 127,000
Direct materials $ 11,600
Direct labor $ 16,600
Actual total fixed manufacturing overhead $ 43,470
Selling and administrative expense $ 3,100
Actual hours of shaper use 250 hours
The gross margin that would be reported on the income statement prepared for internal
management purposes would be closest to:
A) $58,550
B) $52,230
C) $55,450
D) $127,000
34) Coble Woodworking Corporation produces fine cabinets. The company uses a job-order
costing system in which its predetermined overhead rate is based on capacity. The capacity of the
factory is determined by the capacity of its constraint, which is an automated shaper. Additional
information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 33,075
Capacity of the shaper 270 hours
Actual results:
Sales $ 79,268
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Direct materials $ 12,200
Direct labor $ 17,400
Actual total fixed manufacturing overhead $ 33,075
Selling and administrative expense $ 8,100
Actual hours of shaper use 250 hours
The gross margin that would be reported on the income statement prepared for internal
management purposes would be closest to:
A) $19,043
B) $16,593
C) $10,943
D) $79,268
35) Dunnings Woodworking Corporation produces fine cabinets. The company uses a job-
order costing system in which its predetermined overhead rate is based on capacity. The capacity
of the factory is determined by the capacity of its constraint, which is an automated router.
Additional information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 10,998
Capacity of the router 180 hours
Actual results:
Actual total fixed manufacturing overhead $ 10,998
Actual hours of router use 130 hours
The predetermined overhead rate based on hours at capacity is closest to:
A) $84.60 per hour
B) $61.10 per hour
C) $61.54 per hour
D) $44.44 per hour
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36) Dunnings Woodworking Corporation produces fine cabinets. The company uses a job-
order costing system in which its predetermined overhead rate is based on capacity. The capacity
of the factory is determined by the capacity of its constraint, which is an automated router.
Additional information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 10,998
Capacity of the router 180 hours
Actual results:
Actual total fixed manufacturing overhead $ 10,998
Actual hours of router use 130 hours
The manufacturing overhead applied is closest to:
A) $7,943
B) $8,000
C) $5,778
D) $10,998
37) The management of Bullinger 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 17,000 machine-hours. Capacity is 20,000 machine-hours and the actual level
of activity for the year is assumed to be 15,700 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 $25,500 per year. For simplicity, it is assumed
that this is the estimated manufacturing overhead for the year as well as the manufacturing
overhead at capacity. It is further assumed that this is also the actual amount of manufacturing
overhead for the year.
If the company bases its predetermined overhead rate on the estimated amount of the allocation
base for the upcoming year, then the predetermined overhead rate is closest to:
A) $1.50 per machine-hour
B) $1.67 per machine-hour
C) $1.28 per machine-hour
D) $1.62 per machine-hour
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38) The management of Bullinger 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 9,000 machine-hours. Capacity is 12,000 machine-hours and the actual level of
activity for the year is assumed to be 7,700 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 $11,880 per year. For simplicity, it is assumed that this is the
estimated manufacturing overhead for the year as well as the manufacturing overhead at
capacity. It is further assumed that this is also the actual amount of manufacturing overhead for
the year.
If the company bases its predetermined overhead rate on the estimated amount of the allocation
base for the upcoming year, then the predetermined overhead rate is closest to:
A) $1.32 per machine-hour
B) $1.49 per machine-hour
C) $0.99 per machine-hour
D) $1.54 per machine-hour
39) The management of Bullinger 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 26,000 machine-hours. Capacity is 29,000 machine-hours and the actual level
of activity for the year is assumed to be 24,700 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 $34,840 per year. For simplicity, it is assumed
that this is the estimated manufacturing overhead for the year as well as the manufacturing
overhead at capacity. It is further assumed that this is also the actual amount of manufacturing
overhead for the year.
If the company bases its predetermined overhead rate on capacity, then the predetermined
overhead rate is closest to:
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A) $1.41 per machine-hour
B) $1.34 per machine-hour
C) $1.51 per machine-hour
D) $1.20 per machine-hour
40) The management of Bullinger 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 9,000 machine-hours. Capacity is 12,000 machine-hours and the actual level of
activity for the year is assumed to be 7,700 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 $11,880 per year. For simplicity, it is assumed that this is the
estimated manufacturing overhead for the year as well as the manufacturing overhead at
capacity. It is further assumed that this is also the actual amount of manufacturing overhead for
the year.
If the company bases its predetermined overhead rate on capacity, then the predetermined
overhead rate is closest to:
A) $1.54 per machine-hour
B) $1.32 per machine-hour
C) $1.49 per machine-hour
D) $0.99 per machine-hour
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41) The management of Bullinger 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 18,000 machine-hours. Capacity is 21,000 machine-hours and the actual level
of activity for the year is assumed to be 16,700 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 $25,740 per year. For simplicity, it is assumed
that this is the estimated manufacturing overhead for the year as well as the manufacturing
overhead at capacity. It is further assumed that this is also the actual amount of manufacturing
overhead for the year.
If the company bases its predetermined overhead rate on capacity, what would be the cost of
unused capacity reported on the income statement prepared for internal management purposes?
(Round intermediate calculations to 2 decimal places.)
A) $3,240.00
B) $3,340.00
C) $1,859.00
D) $5,199.00
42) The management of Bullinger 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 9,000 machine-hours. Capacity is 12,000 machine-hours and the actual level of
activity for the year is assumed to be 7,700 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 $11,880 per year. For simplicity, it is assumed that this is the
estimated manufacturing overhead for the year as well as the manufacturing overhead at
capacity. It is further assumed that this is also the actual amount of manufacturing overhead for
the year.
If the company bases its predetermined overhead rate on capacity, what would be the cost of
unused capacity reported on the income statement prepared for internal management purposes?
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A) $2,970
B) $2,541
C) $1,716
D) $4,257
43) Zackery Woodworking Corporation produces fine cabinets. The company uses a job-
order costing system in which its predetermined overhead rate is based on capacity. The capacity
of the factory is determined by the capacity of its constraint, which is an automated lathe.
Additional information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 7,452
Capacity of the lathe 230 hours
Actual results:
Actual total fixed manufacturing overhead $ 7,452
Actual hours of lathe use 180 hours
The manufacturing overhead applied is closest to:
A) $9,900
B) $5,832
C) $7,748
D) $7,452
44) Zackery Woodworking Corporation produces fine cabinets. The company uses a job-
order costing system in which its predetermined overhead rate is based on capacity. The capacity
of the factory is determined by the capacity of its constraint, which is an automated lathe.
Additional information is provided below for the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead $ 7,452
Capacity of the lathe 230 hours
Actual results:
Actual total fixed manufacturing overhead $ 7,452
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Actual hours of lathe use 180 hours
The cost of unused capacity that would be reported as a period expense on the income statement
prepared for internal management purposes would be closest to:
A) $2,448
B) $296
C) $0
D) $1,620
45) The management of Holdaway 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 73,800 machine-hours. Capacity is 82,800 machine-hours and the actual level
of activity for the year is assumed to be 69,700 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 $5,535,180 per year. For simplicity, it is
assumed that this is the estimated manufacturing overhead for the year as well as the
manufacturing overhead at capacity. It is further assumed that this is also the actual amount of
manufacturing overhead for the year.
If the company bases its predetermined overhead rate on capacity, then the predetermined
overhead rate is closest to:
A) $75.00 per machine-hour
B) $73.02 per machine-hour
C) $79.41 per machine-hour
D) $66.85 per machine-hour
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46) The management of Holdaway 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 79,000 machine-hours. Capacity is 88,000 machine-hours and the actual level
of activity for the year is assumed to be 74,900 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 $5,700,640 per year. For simplicity, it is
assumed that this is the estimated manufacturing overhead for the year as well as the
manufacturing overhead at capacity. It is further assumed that this is also the actual amount of
manufacturing overhead for the year.
If the company bases its predetermined overhead rate on capacity, then the predetermined
overhead rate is closest to:
A) $72.16 per machine-hour
B) $70.38 per machine-hour
C) $76.11 per machine-hour
D) $64.78 per machine-hour
47) The management of Holdaway 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 79,000 machine-hours. Capacity is 88,000 machine-hours and the actual level
of activity for the year is assumed to be 74,900 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 $5,700,640 per year. For simplicity, it is
assumed that this is the estimated manufacturing overhead for the year as well as the
manufacturing overhead at capacity. It is further assumed that this is also the actual amount of
manufacturing overhead for the year.
If the company bases its predetermined overhead rate on capacity, what would be the cost of
unused capacity reported on the income statement prepared for internal management purposes?
A) $295,856
B) $848,618
C) $583,020
D) $552,762
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48) The management of Featheringham 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 57,600 machine-hours. Capacity is 70,600 machine-hours and the actual level
of activity for the year is assumed to be 54,600 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 $2,836,002 per year. It is assumed that a number
of jobs were worked on during the year, one of which was Job Z77W which required 530
machine-hours. If the company bases its predetermined overhead rate on capacity, then the
predetermined overhead rate is closest to:
A) $49.24 per machine-hour
B) $40.17 per machine-hour
C) $52.45 per machine-hour
D) $47.58 per machine-hour
49) The management of Featheringham 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 62,000 machine-hours. Capacity is 75,000 machine-hours and the actual level
of activity for the year is assumed to be 59,000 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 $2,836,500 per year. It is assumed that a number
of jobs were worked on during the year, one of which was Job Z77W which required 410
machine-hours.
If the company bases its predetermined overhead rate on capacity, then the predetermined
overhead rate is closest to:
A) $48.08 per machine-hour
B) $37.82 per machine-hour
C) $48.91 per machine-hour
D) $45.75 per machine-hour
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50) The management of Featheringham 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 58,700 machine-hours. Capacity is 71,700 machine-hours and the actual level
of activity for the year is assumed to be 55,700 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 $2,837,169 per year. It is assumed that a number
of jobs were worked on during the year, one of which was Job Z77W which required 420
machine-hours.
If the company bases its predetermined overhead rate on capacity, then the amount of
manufacturing overhead charged to job Z77W is closest to:
A) $16,619.40
B) $20,651.40
C) $21,733.22
D) $21,393.37
51) The management of Featheringham 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 62,000 machine-hours. Capacity is 75,000 machine-hours and the actual level
of activity for the year is assumed to be 59,000 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 $2,836,500 per year. It is assumed that a number
of jobs were worked on during the year, one of which was Job Z77W which required 410
machine-hours.
If the company bases its predetermined overhead rate on capacity, then the amount of
manufacturing overhead charged to job Z77W is closest to:
A) $15,506.20
B) $19,065.00
C) $20,051.12
D) $19,711.27
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52) The management of Featheringham 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 62,000 machine-hours. Capacity is 75,000 machine-hours and the actual level
of activity for the year is assumed to be 59,000 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 $2,836,500 per year. It is assumed that a number
of jobs were worked on during the year, one of which was Job Z77W which required 410
machine-hours.
If the company bases its predetermined overhead rate on capacity, what would be the cost of
unused capacity reported on the income statement prepared for internal management purposes?
A) $137,250
B) $605,120
C) $491,660
D) $467,870
53) 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 50,000
machine-hours. Capacity is 62,000 machine-hours and the actual level of activity for the year is
assumed to be 58,500 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 $806,000 per year. It is assumed that a number of jobs were worked on during the
year, one of which was Job Q20L which required 310 machine-hours.
If the company bases its predetermined overhead rate on the estimated amount of the allocation
base for the upcoming year, then the predetermined overhead rate is closest to:
A) $13.78 per machine-hour
B) $11.11 per machine-hour
C) $16.12 per machine-hour
D) $13.00 per machine-hour
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54) 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 69,000
machine-hours. Capacity is 82,000 machine-hours and the actual level of activity for the year is
assumed to be 72,400 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 $4,130,340 per year. It is assumed that a number of jobs were worked on during
the year, one of which was Job Q20L which required 470 machine-hours.
If the company bases its predetermined overhead rate on the estimated amount of the allocation
base for the upcoming year, then the predetermined overhead rate is closest to:
A) $57.05 per machine-hour
B) $60.83 per machine-hour
C) $59.86 per machine-hour
D) $50.37 per machine-hour
55) 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 68,000
machine-hours. Capacity is 96,000 machine-hours and the actual level of activity for the year is
assumed to be 75,500 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 $783,360 per year. It is assumed that a number of jobs were worked on during the
year, one of which was Job Q20L which required 500 machine-hours.
If the company bases its predetermined overhead rate on the estimated amount of the allocation
base for the upcoming year, then the amount of manufacturing overhead charged to Job Q20L is
closest to:
A) $4,080.00
B) $5,187.81
C) $3,674.70
D) $5,760.00
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56) 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 69,000
machine-hours. Capacity is 82,000 machine-hours and the actual level of activity for the year is
assumed to be 72,400 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 $4,130,340 per year. It is assumed that a number of jobs were worked on during
the year, one of which was Job Q20L which required 470 machine-hours.
If the company bases its predetermined overhead rate on the estimated amount of the allocation
base for the upcoming year, then the amount of manufacturing overhead charged to Job Q20L is
closest to:
A) $23,673.90
B) $26,812.98
C) $28,589.98
D) $28,134.20
57) 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 69,000
machine-hours. Capacity is 82,000 machine-hours and the actual level of activity for the year is
assumed to be 72,400 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 $4,130,340 per year. It is assumed that a number of jobs were worked on during
the year, one of which was Job Q20L which required 470 machine-hours.
If the company bases its predetermined overhead rate on capacity, then the predetermined
overhead rate is closest to:
A) $57.05 per machine-hour
B) $59.86 per machine-hour
C) $50.37 per machine-hour
D) $60.83 per machine-hour
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58) 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 52,000
machine-hours. Capacity is 65,000 machine-hours and the actual level of activity for the year is
assumed to be 58,000 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 $592,800 per year. It is assumed that a number of jobs were worked on during the
year, one of which was Job Q20L which required 360 machine-hours.
If the company bases its predetermined overhead rate on capacity, then the amount of
manufacturing overhead charged to Job Q20L is closest to:
A) $4,104.00
B) $2,943.56
C) $3,679.45
D) $3,283.20
59) 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 69,000
machine-hours. Capacity is 82,000 machine-hours and the actual level of activity for the year is
assumed to be 72,400 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 $4,130,340 per year. It is assumed that a number of jobs were worked on during
the year, one of which was Job Q20L which required 470 machine-hours.
If the company bases its predetermined overhead rate on capacity, then the amount of
manufacturing overhead charged to Job Q20L is closest to:
A) $28,589.98
B) $26,592.60
C) $26,812.98
D) $23,673.90
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60) 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 50,000
machine-hours. Capacity is 63,000 machine-hours and the actual level of activity for the year is
assumed to be 55,000 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 $1,858,500 per year. It is assumed that a number of jobs were worked on during
the year, one of which was Job Q20L which required 340 machine-hours.
If the company bases its predetermined overhead rate on capacity, what would be the cost of
unused capacity reported on the income statement prepared for internal management purposes?
A) $383,500
B) $185,850
C) $168,955
D) $236,000
61) 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 69,000
machine-hours. Capacity is 82,000 machine-hours and the actual level of activity for the year is
assumed to be 72,400 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 $4,130,340 per year. It is assumed that a number of jobs were worked on during
the year, one of which was Job Q20L which required 470 machine-hours.
If the company bases its predetermined overhead rate on capacity, what would be the cost of
unused capacity reported on the income statement prepared for internal management purposes?
A) $654,810
B) $687,076
C) $547,669
D) $483,552
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62) When the fixed costs of capacity are spread over the estimated activity of the period
rather than the level of activity at capacity, the units that are produced must shoulder the costs of
unused capacity.
⊚ true
⊚ false
63) When the predetermined overhead rate is based on the level of activity at capacity, an
item called the Cost of Unused Capacity may appear to be treated as a period expense on income
statements prepared for internal management use.
⊚ true
⊚ false
64) If the predetermined overhead rate is based on the estimated level of activity for the
current period, then products will be charged only for the capacity that they use and will not be
charged for the capacity they don’t use.
⊚ true
⊚ false
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Answer Key
Test name: chapter 2B
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