QUESTION

The following information pertains to Glass Works Company for 2014.

Budgeted direct-labour cost: --------------------------------75,000 hours at $16 per hour

Actual direct-labour cost: ------------------------------------80,000 hours at $17.50 per hour.

Budgeted Manufacturing Overhead: ---------------------$ 997,500

Actual Manufacturing Overhead: Depreciation ------------------------------------------------- $ 240,000 Property Taxes---------------------------------------------------12,000 Indirect Labour --------------------------------------------------82,000 Supervisory Salaries --------------------------------------------200,000

Utilities------------------------------------------------------------ 59,000 Insurance ----------------------------------------------------------30,000 Rental of Space-------------------------------------------------- 300,000 Indirect Material --------------------------------------------------- 79,000

Required

(i) Compute the firms predetermined overhead rate, which is based on direct-labour hours. (3 marks)

(ii) Calculate the overapplied or underapplied overhead for 2014. (4 marks) (iii) Prepare a journal entry to close out the Manufacturing Overhead Account into Cost of Goods Sold. (3 marks)