accounting
Answers
1. The overhead allocation rate is calculated by dividing the budgeted overhead cost by the budgeted labor cost.
Budgeted overhead cost/Budgeted labor cost = £1500/£2000 = £0.75 per hour
2. The ending balance in work in process can be calculated by adding the materials and labor costs of the two jobs and dividing by the overhead allocation rate.
(£25 + £15) + (£20 + £32) = £122
£122/£0.75 = £162.67
Ending balance in work in process = £162.67
Ending balance in cost of goods sold = Actual overhead costs + Ending balance in work in process
= £1250 + £162.67
= £1412.67
3. The under-or overallcated overhead amount can be calculated by subtracting the Actual overhead costs from the Budgeted overhead costs.
Budgeted overhead cost - Actual overhead costs = £1500 - £1250
= £250
Under-or overallocated overhead = £250
4a. Ending balance in work in process = £162.67
End