Aspen Company estimates its manufacturing overhead to be $506,000 and its direct labor costs to be $506,000 for year 2. Aspen worked on three jobs for the year. Job 2-1, which was sold during year 2, had actual direct labor costs of $244,650. Job 2-2, which was completed, but not sold at the end of the year, had actual direct labor costs of $407,750. Job 2-3, which is still in work-in-process inventory, had actual direct labor costs of $163,100. Actual manufacturing overhead for year 2 was $802,300. Manufacturing overhead is applied on the basis of direct labor costs.
Required:
Prepare an entry to allocate over- or underapplied overhead to Work in Process, Finished Goods and Cost of Goods Sold. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Predetermined overhead rate | ||||||
Total manufacturing overhead | $506,000 | |||||
Direct labor costs | $506,000 | |||||
Predetermined overhead rate | $1 | (506,000/506,000) | ||||
Job 2-1 | Job 2-2 | Job 2-3 | ||||
Cost of goods sold | Finished goods | Work in process | ||||
Direct labor cost | $244,650 | $407,750 | $163,100 | |||
Manufacturing cost allocated | $244,650 | $407,750 | $163,100 | $815,500 | ||
Actual manufacturing cost | $802,300 | |||||
Over applied | $3,960 | $6,600 | $2,640 | $13,200 | (815,500-802,300) | |
(244,650/815,500*13,200) | (407,750/815,500*13,200) | (163,100/815,500*13,200) | ||||
Debit | Credit | |||||
Manufacturing overhead | $13,200 | |||||
Cost of goods sold | $3,960 | |||||
Finished goods | $6,600 | |||||
Work in Process | $2,640 | |||||
(Overapplied overhead allocated) | ||||||
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