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The Kristopher Company uses a job-costing system at its plant. The plant has a Machining Department and an Assembly Department.Its job-costing system has two direct-cost
- The Kristopher Company uses a job-costing system at its plant. The plant has a Machining Department and an Assembly Department.Its job-costing system has two direct-cost categories (direct materials and direct manufacturing labor) and two manufacturing overhead cost pools (the Machining Department overhead, allocated to jobs based on actual machine-hours, and the Assembly Department overhead, allocated to jobs based on actual direct manufacturing labor cost). The 2018 budget for the plant is:
Machining | Assembly | |||
Manufacturing overhead | $1,800,000 | $3,600,000 | ||
Direct manufacturing labor cost | $1,400,000 | $2,000,000 | ||
Machine-hours | 50,000 | 200,000 |
At the end of 2018, the actual manufacturing overhead costs were $2,100,000 in Machining and $3,700,000 in Assembly. A total of 55,000 actual machine-hours were used in Machining and total actual direct manufacturing labor costs in Assembly were $2,200,000.
Required:
- Determine the predetermined manufacturing overhead rate for each department.
- Calculate under or over-allocated overhead for each department.
- Assuming that the company uses the write-off to cost of goods sold approach method, prepare the journal entries to write off the under or over-allocated overhead for each department.
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