Analyze Manufacturing Overhead (Learning Objectives 4, S)

In the E-Z-Boy T-accounts shown on page 121 and 126, actual manufacturing overhead was $210,000. Suppose instead that the actual manufacturing overhead was $225,000. Continue to assume that E-Z-Boy's total direct labor cost for the year was $250,000.

1. Draw a T-account of Manufacturing Overhead. Is Manufacturing Overhead underallocated or overallocated? By how much?

2. What would be the actual manufacturing overhead rate? Does this make sense in light of your answer to question 1 ?

3. Assuming that all of the jobs have been sold, is Cost of Goods Sold too high or too low? Explain.

4. Make the journal entry to close out E-Z-Boy’s Manufacturing Overhead account.