Author Question: Markswell Corp uses a budgeted factory overhead rate to apply overhead to production. The following ... (Read 120 times)

tfester · **on:** Jul 5, 2018

Markswell Corp uses a budgeted factory overhead rate to apply overhead to production. The following data are available for the year ended December 31, 2014.

The company has budgeted factory overhead of 750,000, direct labor costs of 500,000, and direct labor hours of 15,000. The actual factory overhead incurred is 800,000, direct labor costs of 450,000, and direct labor hours of 17,000.

Required:
a. Determine the budgeted factory overhead rate based on direct labor-hours.
b. What is the applied overhead based on direct labor-hours?
c. Is overhead overapplied or underapplied? Explain.

Question 2

Describe the three roles that an accountant can play in the AIS?

moormoney · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

Answer:
a. 750,000/15,000 hrs. = 50.00 per hour
b. 50.00 17,000 hrs. = 850,000
c. 800,00 - 850,000 = 50,000 overapplied

Answer to Question 2

The three roles the accountant can play in the AIS are designer, user and auditor.

The accountant is a designer of the AIS who brings knowledge of accounting principles, auditing principles, information systems techniques, and systems development methods.

The accountant is also a user of the AIS and will provide feedback on how well the system works, how easy or difficult it is to use, and on what items can be changed or improved from a user perspective. The accountant performs a number of functions within the organization such as controller, treasurer, financial analyst, all of which are users of the AIS. Accountants, as users of the system can also be effective in the design process because of the functions they perform.

As internal and external auditors, accountants audit the AIS or provide assurance services about internal control or other items discussed in the chapter. Auditors are interested in the reliability of accounting data and of the reports produced by the system. They may test the system's controls, assess the system's efficiency and effectiveness, and participate in the system design process. The auditor must possess knowledge of internal controls, systems development techniques, technology and the design and operation of the AIS to be effective.