Back into unknown information (Learning Objective 4)

At the end of the 2008 fiscal year, Rave Kayaks’ manufacturing records show the fol¬ lowing unadjusted ending account balances (and the manufacturing costs of which they are comprised):

Rave’s accountants allocated manufacturing overhead during the year using a prede¬ termined rate of $40 per machine hour. At year-end, they computed the actual rate of $52 per machine hour for manufacturing overhead. The beginning balances of both Work in Process Inventory and Finished Goods Inventory were zero.
Requirements 1. How many machine hours did Rave Kayaks use in 2008?
2. Was manufacturing overhead overallocated or underallocated for the year? By how much?

Transcribed Image Text:

Work in Process Finished Cost of Goods Goods Inventory Inventory Sold Unadjusted account balance $250,000 720,000 $1,400,000 Which consisted of: Direct materials.............. $100,000 $170,000 $ 360,000 Direct labor 80,000 250,000 600,000 Manufacturing overhead 70,000 300,000 440,000