Question

Please explain in detail including the math

Yarra Fabrication estimates that its manufacturing overhead will be $2,240,000 in year 1. It further estimates that direct material costs will amount to $1,400,000. Actual manufacturing overhead costs for the year were $2,400,000. Actual direct materials costs were $1,550,000. Manufacturing overhead is applied to jobs based direct materials cost using predetermined rates. Overhead applied in each of the inventory accounts is as follows. Work-in-process inventory Finished goods inventory Cost of goods sold $ 451,000 $1,066,000 $6,683,000 Required: Prepare an entry to allocate the over- or underapplied overhead. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record an entry to allocate the over- or underapplied overhead. Note: Enter debits before credits. Transaction Debit Credit General Journal Applied manufacturing overhead Work-in-process inventory Finished goods inventory Cost of goods sold Manufacturing overhead control Record entry Clear entry View general journal

Answer 1

Overhead rate = 2240000/1400000 = 160% of direct material used

Applied overhead = 1550000*1.6 = 2480000

Actual overhead = 2400000

Over applied overhead = 80000

No	Account and explanation	Debit	Credit
	Manufacturing overhead	80000
	Work in process (451000/8200000*80000)		4400
	Finished goods (1066000/8200000*80000)		10400
	Cost of goods sold		65200