Milestone

Company estimates the company will incur

$73,100

in overhead costs and

4,300

direct labor hours during the year. Actual direct labor hours were

4,550.

Calculate the predetermined overhead allocation rate using direct labor hours as the allocation base, and prepare the journal entry for the allocation of overhead.

Calculate the predetermined overhead allocation rate.

Fill in the labels and complete the formula below.

				Predetermined overhead
(1)		(2)	=	allocation rate
			=		per direct labor hour

Prepare the journal entry for the allocation of overhead.

First, select the formula to calculate the overhead costs allocated. Fill in the labels and complete the formula below.

(3)		(4)	=	Allocated overhead costs
			=

Prepare the journal entry for the allocation of overhead. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)

Date			Accounts and Explanation	Debit	Credit
			(5)
			(6)
			(7)
			(8)
			(9)

(1)

Cost of goods manufactured

Total actual direct labor hours

Total estimated direct labor hours

Total estimated overhead costs

(2)

Cost of goods manufactured

Total actual direct labor hours

Total estimated direct labor hours

Total estimated overhead costs

(3)

Cost of goods manufactured

Predetermined overhead allocation rate

Total actual direct labor hours

Total estimated direct labor hours

Total estimated overhead costs

(4)

Cost of goods manufactured

Predetermined overhead allocation rate

Total actual direct labor hours

Total estimated direct labor hours

Total estimated overhead costs

(5)

Cost of Goods Sold

Finished Goods Inventory

Manufacturing Overhead

Raw Materials Inventory

Wages Payable

Work-in-Process Inventory

(6)

Cost of Goods Sold

Finished Goods Inventory

Manufacturing Overhead

Raw Materials Inventory

Wages Payable

Work-in-Process Inventory

(7)

Cost of Goods Sold

Finished Goods Inventory

Manufacturing Overhead

Raw Materials Inventory

Wages Payable

Work-in-Process Inventory

(8)

Cost of Goods Sold

Finished Goods Inventory

Manufacturing Overhead

Raw Materials Inventory

Wages Payable

Work-in-Process Inventory

(9)

Adjusted MOH for underallocated overhead.

Allocated overhead to WIP.

Completed jobs, costs assigned to FG.

Incurred labor, direct labor assigned to WIP, indirect labor accumulated in MOH.

Incurred overhead, costs accumulated in MOH.

Purchased materials, accumulated in RM.

Sold jobs on account.

Used materials, direct materials assigned to WIP, indirect materials accumulated in MOH.