Question
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.
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.
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| Predetermined overhead | |
| (1) | (2) | = | allocation rate | ||
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| = |
| 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 | ||
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| = |
| ||
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 | ||
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| (5) |
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| (6) |
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| (7) |
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| (8) |
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| (9) |
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(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.
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The Process Auditing And Techniques Guide
Authors: J.P. Russell
2nd Edition
087389782X, 978-0873897822
