P17-28A Accounting manufacturing overhead White Woods manufactures jewellery boxes. The primary materials (wood, brass, and glass) and
Question:
P17-28A Accounting manufacturing overhead
White Woods manufactures jewellery boxes. The primary materials (wood, brass, and glass) and direct labour are traced directly to the products. Manufacturing overhead costs are allocated based on machine hours. Data for 2012 follow:
| Estimated (Budget) | Actual |
Machine hours . . . . . . . . . . . . . . . . . . . . . . . . . . . Maintenance labour (repairs to equipment) . . . . . . Plant supervisors salary . . . . . . . . . . . . . . . . . . . . Screws, nails, and glue . . . . . . . . . . . . . . . . . . . . . Plant utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . Freight out . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation on plant and equipment . . . . . . . . . . . . . . . . . . . . . . Advertising expense . . . . . . . . . . . . . . . . . . . . . . . | 25,000 hours $12,000 47,000 24,000 41,000 37,000 87,000 43,000 | 32,100 hours $28,500 48,000 45,000 96,850 46,500 83,000 54,000 |
Requirements
1. Compute the predetermined manufacturing overhead rate.
2. Post actual and allocated manufacturing overhead to the Manufacturing overhead T-account.
3. Close the under- or over allocated overhead to Cost of goods sold.
4. The predetermined manufacturing overhead rate usually turns out to be inaccurate. Why dont accountants just use the actual manufacturing overhead rate?