Hartley uniforms produces uniforms.

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

Hartley UniformsHartley 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.

Estimated yearly overhead costs

/

Estimated yearly machine hours

=

Predetermined overhead rate

$194,400

/

7,200

=

$27

per machine hour

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

						Manufacturing
	Actual machine hours	x	Predetermined overhead rate		=	overhead allocated
	6,300	x	$27		=	$170,100

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
Actual indirect materials	50,500			Manufacturing overhead allocated	170,100
Actual indirect manufacturing labor	42,000
Actual depreciation on plant and equipment	72,500
Actual plant utilities	38,400
End Bal	33,300

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

DATA TABLE

	Budget		Actual
Direct labor hours. . . . . . . . . . . . . . . . . . . . . . . .	7,600	hours	6,100	hours
Machine hours. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7,200	hours	6,300	hours
Depreciation on salespeople's autos. . . . . . . . . . . .		$23,000		$23,000
Indirect materials. . . . . . . . . . . . . . . . . . . . . . . .		$48,500		$50,500
Depreciation on trucks used to deliver uniforms
to customers. . . . . . . . . . . . . . . . . . . . . . . . . .		$13,000		$11,000
Depreciation on plant and equipment. . . . . . . . . .		$70,000		$72,500
Indirect manufacturing labor. . . . . . . . . . . . . . . . .		$40,000		$42,000
Customer service hotline. . . . . . . . . . . . . . . . . . . . . .		$19,000		$21,000
Plant utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		$35,900		$38,400
Direct labor cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . .		$72,500		$85,500