Question

At the beginning of the year, Infodeo established its predetermined overhead rate for movies produced during the year by using the following cost predictions: overhead costs, $2,115,000, and direct labor costs, $450,000. At year-end, the company's records show that actual overhead costs for the year are $1,564,300. Actual direct labor cost had been assigned to jobs as follows. Movies completed and released Movies still in production Total actual direct labor cost $300,000 35,000 $335,000 1. Determine the predetermined overhead rate for the year. 2&3. Enter the overhead costs incurred and the amounts applied to movies during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied. 4. Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold. Complete this question by entering your answers in the tabs below. Reg 1 Req 2 and 3 Reg 4

Answer 1

1.Predetermined overhead rate for the year

Overhead rate

Choose numerator	/	Choose denominator	=	Overhead rate
Estimated overhead costs	/	Estimated direct Labour costs	=	overhead rate
$2,115,000	/	$450,000	=	470%

2&3.Overhead is over applied or under applied

Factory overhead

Actual overhead	$1,564,300	$1,574,500	Applied Overhead
		$10,200	Over applied overhead

Overhead applied to jobs : $335,000×470% =$1,574,500

4. Journal entry to close under applied/ Over applied overhead

Date	Particulars	Debit	Credit
Dec. 31	Factory overhead	$10,200
	Cost of goods sold		$10,200

____×___

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