Question
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
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 |
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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 |
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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 |
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Requirement 1. Compute Young's predetermined overhead allocation rate.
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| 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 |
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| Manufacturing Overhead |
| 720,000 | ||
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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 |
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| Manufacturing overhead allocated | |||
Plant janitor's wages | 17,000 |
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Depreciation |
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Bal. |
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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 =
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