Item 2

Exercise 7-32 (Algo) Prorate Over- or Underapplied Overhead (LO 7- 3)

Yarra Fabrication estimates that its manufacturing overhead will be $2,348,800 in year 1. It further estimates that direct material costs will amount to $1,468,000. Actual manufacturioverhead costs for the year were $2,485,000. Actual direct materials costs were $1,635,000. Manufacturing overhead is applied to jobs based on direct materials cost using predetermined rates. The total applied overhead for the year was $2,616,000

The balance in each of the inventory accounts is as follows.

Work-in-process inventory	$	497,750
Finished goods inventory	$	1,176,500
Cost of goods sold	$	7,375,750

Required:

Prepare an entry to allocate the over- or underapplied overhead. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

• Record an entry to allocate the over- or underapplied overhead.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
1

View transaction list Journal entry worksheet