Chapter 2 – Weygandt Managerial 7e
Challenge Exercise Solutions
Solution
CE 2-1
(a)
Costs
Southside
Oceanview
Rocky
Heights
Direct Materials
$ 5,450
$ 7,635
$ 6,480
Direct Labor
4,810
5,980
5,525
(c) Operating Overhead
DEBIT
CREDIT
15,400
(Actual OH)
4,440
(applied)
5,520
(applied)
5,100
(applied)
(d)
Mountain Estates Bid
Estimated Costs
Direct Materials $10,450
Landscaper Labor Costs** 8,125
$60 per hour)
4,440
5,520
5,100
Totals
$14,700
$19,135
$17,105
Solution
CE 2-2
(a) Predetermined overhead rate = $780,000/39,000 = $20 per hour
(b) Applied overhead = $20 x 38,750 = $775,000
(c) Actual overhead $772,450
(d) (1) If estimated overhead increases to $799,500, the predetermined overhead rate
(2) Actual overhead would not directly be impacted by a change in estimated
overhead. However, the increase in estimated overhead indicates that actual overhead
is expected to increase.