Managerial Accounting Quizes and Midterm

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| Question :| (TCO 2) Bubba’s Crawfish Processing Company uses a traditional overhead allocation based on direct labor hours. For the current year overhead is estimated at $2,250,000 and direct labor hours are budgeted at 415,000 hours. Actual overhead was $2,200,000 and actual direct labor hours worked were 422,000.  

(a) Calculate the predetermined overhead rate.
(b) Calculate the overhead applied.
(c) Determine the amount of overhead that is over/underapplied.|
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 | Student Answer:|  | a) Calculate the predetermined overhead rate. 2250000/415000 = 5.4217 per hour (b) Calculate the overhead applied. 422000 x 5.4217 = 2287952 (c) Determine the amount of overhead that is over/under applied. 2287952-2200000 = 87952 over applied |  | Instructor Explanation:| (a) $2,250,000 / 415,000 hours = $5.42 per direct labor hour (DLH) (b) $5.42 DLH * 422,000 hours = $2,287,240

(c) Overapplied $87,240 ($2,287,240 - $2,200,000)|
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 | Points Received:| 6 of 6 |
 | Comments:| be sure to round rates to 2 decimal places. |
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 2.| Question :| (TCO 2) Thibodeaux Limousine Corporation is trying to determine a predetermined manufacturing overhead. Estimated overhead for the upcoming year is $776,000. Budgeted machine hours are 105,000 hours, and budgeted labor hours are 17,500 hours at a rate of $10.00 per hour. Compute the predetermined overhead rate based on:  

(a) Direct labor dollars
(b) Direct labor hours
(c) Machine hours|
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 | Student Answer:|  | (a) Direct labor dollars 776000/17500 x 10 = 443.43% (b) Direct labor hours 776000/17500 =$44.34 per hour (c) Machine hours 776000/105000 = $7.39 per machine hour |  | Instructor Explanation:|

(a) $776,000 / (17,500 * $10.00) = 443%
(b) $776,000 / 17,500 = $44.34 DLH
(c) $776,000 / 105,000 = $7.39 per machine hour
 
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 | Points Received:| 6 of 6 |
 | Comments:| |
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 3.| Question :| (TCO 1) List and briefly describe four of the five differences between managerial accounting and financial accounting.|
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 | Student Answer:|  | 1). Managerial accounting provides information for internal users, and Financial accounting is better off for external users. Typical examples of Managerial accounting reports include but not limited to various budget, labor, sales, production, material, variance analysis stating the difference between the budget and the actual results. On the other hand, examples of FA reports are Income Statement, Cash Flow Statements, and Balance Sheet. 2). Managerial accounting uses historical data to create future reports, while use of only historical information for Financial accounting. 3). Managerial accounting can create reports at any point of time, as for Financial accounting, it has a set period usually the fiscal or financial year. 4). Managerial accounting can be prepared using an entity's own rules and regulation, but with Financial accounting, it follows the generally Accepted Accounting Principles. 5). Managerial accounting can produce custom or already made reports; on the other hand, Financial accounting has a set of standard financial report. |  | Instructor Explanation:| 1. Financial accounting is aimed primarily at external users of accounting information, while managerial accounting is aimed primarily at internal users. 2. Financial accounting is prepared in accordance with GAAP (generally accepted accounting principles), while conformance with GAAP is not required for managerial accounting reports. 3. Financial accounting information is highly summarized, while managerial accounting reports may contain much more detail. 4. Managerial accounting reports may contain a substantial amount of nonmonetary information. 5. Financial accounting records what has happened in the past, while managerial accounting places considerable emphasis on the future. | |

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 | Points Received:| 4 of 4 |
 | Comments:| |
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 4.| Question...
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