In a job order costing system, a company calculates a Predetermined Overhead Allocation Rate at the beginning of the year to allocate the manufacturing overhead job-by-job.

1. By the end of March, the company had allocated manufacturing overhead of $60,000 and incurred $50,000 of actual overhead costs.

a. Did the company over or under-allocate? (2pts)

b. Before any adjustment, would the Manufacturing Overhead account have a debit or credit balance? (2pts)

c. What would be the proper adjusting journal entry at the end of March? (include accounts and amounts) (3pts)

THE NEXT 2 QUESTIONS ARENT SPECIFICALLY IN BOOK, just use some common sense and pretend youre the manager of this department. What would you answer?

2. By the end of June, the company had a similar discrepancy between actual and allocated overhead. Should they adjust/recalculate the Predetermined Overhead Allocation Rate before the next year-end? (4pts)

3. What specific event(s) might be causing these discrepancies between actual and allocated overhead? (4pts)