Question
The following information relates to Beautiful Designs Pty Ltd for the year just ended: Budgeted direct labour cost: 80000 hours @ $22 per hour Actual
The following information relates to Beautiful Designs Pty Ltd for the year just ended:
Budgeted direct labour cost: 80000 hours @ $22 per hour
Actual direct labour cost: 78000 hours @ $25 per hour
Budgeted manufacturing overhead: $1048000
Actual manufacturing overhead:
Depreciation: $256000
Property taxes: 19000
Indirect labour: 88000
Supervisory salaries: 210000
Electricity: 48000
Insurance: 25000
Factory rent: 290000
Indirect material (see data below): 64000
Indirect material:
Beginning inventory, 1 January: $60000
Purchases: 84000
Ending inventory, 31 December: 80000
Required:
- Calculate the firm's predetermined overhead rate, which was based on direct labour hours.
- Calculate the over-applied or under-applied overhead for the year.
- Prepare journal entry to close the manufacturing overhead account to cost of goods sold.
- What caused the over-applied or under-applied overhead?
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