Question

How do I calculate?
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, $1,833,000,and direct labor costs, $470,000. At year-end, the company's records show that actual overhead costs for the year are $940,200. Actual direct labor cost had been assigned to jobs as follows. Movies completed and released Movies still in production Total actual direct labor cost $ 200,000 44,000 $ 244,000 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. Req1 Req 2 and 3 Req 4 Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold. View transaction list View journal entry worksheet No General Journal Debit Credit Date Dec. 31 Factory overhead Cost of goods sold

Answer 1

SOLUTION

1. Predetermined overhead rate = Estimated overhead / Estimated direct labor cost * 100

= $1,833,000 / 470,000 = 390%

2&3. Applied overhead costs = Direct labor cost * Predetermined overhead rate

= 244,000 * 390% = $951,600

Factory overhead

Actual overhead	940,200	Applied overhead	951,600
Factory overhead (Over applied))	11,400

Over applied overhead = Applied overhead - Actual overhead

= 951,600 - 940,200 = 11,400

4. Journal entry-

Factory overhead	11,400
Cost of goods sold		11,400
(To assign over applied overhead to cost of goods sold)