Prestige Woods manufactures jewelry boxes. The primary materials (wood, brass, and glass) and direct labor are assigned directly to the products. Manufacturing overhead costs are allocated based on machine hours. Data for 2018 follow:

Requirements
1. Compute the predetermined overhead allocation rate. Round to two decimal places.
2. Post actual and allocated manufacturing overhead to the Manufacturing Overhead T-account.
3. Prepare the journal entry to adjust for under allocated or over allocated overhead.
4. The predetermined overhead allocation rate usually turns out to be inaccurate.
Why don't accountants just use the actual manufacturing overhead rate?

Transcribed Image Text:

Estimated Actual Machine hours 32,100 hours 27,000 hours $ 17,000 $ 23,500 Maintenance labor (repairs to equipment) Plant supervisor's salary 48,000 50,000 Screws, nails, and glue 28,000 45,000 Plant utilities 44,000 92,850 Freight out 37,000 49,500 Depreciation on plant and equipment 85,400 83,000 Advertising expense 53,000 46,000