Analyze Manufacturing Overhead (Learning Objectives 4, 5)

Suit Up produces uniforms. The company allocates manufacturing overhead based on the machine hours each job uses. Suit Up reports the following cost data for 2008:

Requirements 1. Compute the predetermined manufacturing overhead rate.
2. Post actual and allocated manufacturing overhead to the Manufacturing Overhead T-account.
3. Close the underallocated or overallocated Manufacturing Overhead to Cost of Goods Sold.
4. How can managers use accounting information to help control manufacturing overhead costs?

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Budget Actual Direct labor hours.......... 7,000 hours 6,200 hours Machine hours. 6,920 hours 6,400 hours Depreciation on salespeople's autos...... $22,000 $22,000 Indirect materials ........... 50,000 52,000 Depreciation on trucks used to deliver uniforms to customers.......... 14,000 12,000 Depreciation on plant and equipment..... 65,000 67,000 Indirect manufacturing labor........... 40,000 43,000 Customer service hotline. 19,000 21,000 Plant utilities....... 18,000 20,000 Direct labor cost........ 70,000 85,000