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Why do companies develop estimates for overhead costs

Why do companies develop estimates for overhead costs? How are estimates developed? 

 

97. What is the formula for calculating the predetermined overhead rate? How is the rate used in product costing? 

 

98. Samantha's Sundries Inc. assigns overhead to specific jobs based on machine hours. At the beginning of the current year, estimated overhead costs were $400,000 and estimated machine hours were 25,000. By the end of the year, actual overhead costs were calculated to be $375,000 and actual machine hours were 30,000. One of the jobs worked on during the year was Job #49 which used 30 machine hours.

How much overhead was applied to Job #49? 

 

99. Samantha's Sundries Inc. assigns overhead to specific jobs based on machine hours. At the beginning of the current year, estimated overhead costs were $400,000 and estimated machine hours were 25,000. By the end of the year, actual overhead costs were calculated to be $375,000 and actual machine hours were 30,000.

By how much was overhead over- or underapplied for the year? 

 

Jan 09 2020 Read more Less More

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