Problem 1 - The Denmark Company

1. Material Cost
Factory Overhead = 1,000,000 =
800,000

2. Units of Production
Factory Overhead = 1,000,000 =
20,000

3. Machine hours
Factory Overhead = 1,000,000 =
160,000

4. Direct Labor Cost

Factory Overhead = 1,000,000 =
500,000

5. Direct Labor Hours

Factory Overhead = 1,000,000 =
50,000
 1.25 = 125%

P50 per unit

P6.25

200%

P20
Problem 2 - Marco Company

1. Overhead Application Rate

Factory Overhead Rate = 510,000 = P2.55 /DLHr.
200,000

2.) Applied Factory Overhead

Factory Overhead Applied = 210,000 * 2.55

3.) Over or Underapplied Overhead

Factory Overhead Control 540,000
Less Applied (535,500)
Underapplied P4,500
= 535,500
Problem 3 - Marvin Company

A.
1. Applied Factory Overhead
Work in Process 473,200
Factory Overhead Applied (84,500 x 5.6) 473,200

Factory Overhead Rate

456,120 = 5.6
81450

2. Actual Factory Overhead

Factory Overhead Control 470,800
Misc. Accounts 470,800

3. Closing of Applied Overhead and Actual Factory Account

Factory Overhead Applied 473,200
Cost of Goods Sold 2,400
Factory Overhead Control 470,800

B.
Cost of Goods Sold = 350,000
473,200

Finished Goods = 100,000

473,200

Work-in-Process = 23,200
473,200
* 2,400 = 1,775

* 2,400 = 507

* 2,400 = 118
Problem 4 - Ellery Corporation

1. Amount of Overhead to be added

Job 123 124 125
Direct Labor 600 940 1,400
Factory Overhead Rate 180% 180% 180%
Applied Factory Overhead 1,080 1,692 2,520

2. Total cost of each job

Job 123 124 125
Direct Materials 300 1,080 720
Direct Labor 600 940 1,400
Factory Overhead 1,080 1,692 2,520
Total 1,980 3,712 4,640
 126
5,120
180%
9,216

126 Total
4,200 6,300
5,120 8,060
9,216 14,508
18,536 28,868
Problem 5 - Thermal Corporation

1.)
a. Direct Method
P1 P2 S1
Direct Cost 90,000 60,000 20,000
Allocated Cost
S1 10,000 10,000 (20000)
S2 20,000 12,000
Total 120,000 82,000
Base 50,000 MHrs. 20,000 DLHrs.
Factory Overhead Rate P2.4 /MHr. P4.1/DLHr.

b.) Step Method

P1 P2 S1
Direct Cost 90,000 60,000 20,000
Allocated Cost
S1 2,000 2,000 (20000)
S2 30,000 18,000
Total 122,000 80,000
Base 50,000 MHrs. 20,000 DLHrs.
Factory Overhead Rate P2.44 /MHr. P4 /DLHr.

c.) Algebraic Method

P1 P2 S1
Direct Cost 90,000 60,000 20,000
Allocated Cost
S1 3,143 3,143 (31,429)
S2 28,572 17,143 11,429
Total 121,715 80,286
Base 50,000 MHrs. 20,000 DLHrs.
Factory Overhead Rate P2.43 /MHr. P4 /DLHr.

2.)
S1 = 20,000 + 20%
S2 = 32,000 + 80%

S1 = 20,000 + 20%(32,000+80%)
=20,000 + 6,400 + .16
=26,400
=26,400 / .84
=31,429

S2 = 32,000 + 80%
=32,000 + 25,143
=57,143
S2
32,000

(32,000)

S2
32,000

16,000
(48,000)

S2
32,000

25,143
(57,143)