F#5

produces uniforms. The company allocates manufacturing overhead based on the machine hours each job uses.

Superior Uniforms

reports the following cost data for the past year:

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(Click the icon to view the cost data.)Read the requirements

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.

Requirement 1. Compute the predetermined manufacturing overhead rate.

Enter the formula for predetermined manufacturing overhead rate, then compute the rate.

=

Predetermined overhead rate

=

per machine hour

Requirement 2. Calculate the allocated manufacturing overhead for the past year.

						Manufacturing
					=	overhead allocated
					=

Requirement 3. Compute the underallocated or overallocated manufacturing overhead. How will this underallocated or overallocated manufacturing overhead be disposed of?

First calculate the preliminary manufacturing overhead balance using the T-account.

Manufacturing Overhead

Close the under- or overallocated overhead to Cost of Goods Sold by journalizing the entry. (Record debits first, then credits. Exclude explanations from any journal entries.)

Journal Entry
Date		Accounts	Debit	Credit

Requirement 4. How can managers use accounting information to help control manufacturing overhead costs?

To help control manufacturing overhead, managers compare the actual line item amounts for

depreciation on delivery trucks

finished goods inventory

manufacturing overhead

work in process inventory

with the budgeted amounts. Managers will also investigate only

small

large

differences between actual and budgeted amounts to identify the reasons why actual costs

are the same as planned or budgeted costs

are the same as previous years costs

differ from planned or budgeted costs

differ from previous years costs

Data table

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	Budget	Actual
Direct labor hours. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7,400 hours	6,200 hours
Machine hours. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6,800 hours	6,500 hours
Depreciation on salespeople's autos. . . . . . . . . . . . . . . . . . . . . . . . . . . .	$22,500	$22,500
Indirect materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$50,500	$52,000
Depreciation on trucks used to deliver uniforms to customers. . . . . .	$16,000	$13,500
Depreciation on plant and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . .	$68,000	$69,500
Indirect manufacturing labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$39,500	$40,500
Customer service hotline. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$22,000	$24,000
Plant utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$25,600	$26,600
Direct labor cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$69,000	$85,000