Foundry uses a predetermined overhead allocation rate to allocate overhead to individual jobs, based on the machine hours required.

COMPLETE REQUIREMENTS 3 AND 4

Given Information

At the beginning of 2018, the company expected to incur the following:

	Manufacturing overhead costs	$840,000
	Direct labor costs	1,480,000
	Machine hours	70,000	hours

At the end of 2018, the company had actually incurred:

Direct labor costs	$1,230,000
Depreciation on manufacturing plant and equipment	620,000
Property taxes on plant	35,500
Sales salaries	26,000
Delivery drivers' wages	22,500
Plant janitor's wages	17,000
Machine hours	60,000	hours

.

Requirement 1. Compute Young's predetermined overhead allocation rate.

				Predetermined overhead
Estimated overhead cost	/	Estimated machine hours	=	allocation rate
$840,000	/	70,000	=	$12	per machine hour

Requirement 2. Prepare the journal entry to allocate manufacturing overhead. (Record debits first, then credits. Exclude explanations from any journal entries.)

Date			Accounts	Debit	Credit
Dec. 31			Work-in-Process Inventory	720,000
			Manufacturing Overhead		720,000

Requirement 3. Post the manufacturing overhead transactions to the T-account and calculate the balance. (Enter the ending balance on the last line.)

Manufacturing Overhead
Property taxes on plant		35,500					Manufacturing overhead allocated
Plant janitor's wages		17,000
Depreciation
Bal.

Requirement 4

Complete the journal entry for MOH - Overlapped

Unadjusted balance of cost of goods sold (debit) =

Less : overabsorption of manufaturing overheads (credit) =

adjusted ending balance of cost of goods sold =