Question

Ch 02 Ex 2-156 Submit Saved Help Save & Exlt Check my work 1 At the beginning of the year, Custom Mfg. established its predetermined overhead rate by using the following cost predictions: overhead costs, $440,000, and direct materials costs, $200,000. At year-end, the company's records show that actual overhead costs for the year are $1,106,500. Actual direct materials cost had been assigned to jobs as follows. 7 Jobs completed and sold Jobs in finished goods inventory Jobs in work in process inventory $370,000 72,000 points 57,000 Sklpped $499,000 Total actual direct materials cost 1. Determine the predetermined overhead rate. 2&3. Enter the overhead costs incurred and the amounts applied to jobs 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. еВook Hint Ask Print Complete this question by entering your answers in the tabs below. References Req 1 Req 2 and 3 Req 4 Determine the predetermined overhead rate. Overhead Rate Choose Denominator: Choose Numerator: Overhead Rate Overhead rate Req 1 Req 2 and 3 >

Answer 1

Solution: Overhead Rate 1 Overhead Rate Choose Numerator: Choose Denominator: Estimated direct material cost Estimated overhead costs Overhead Rate $440,000.00 $200,000.00 220% Factory Overhead $1,106,500 2&3 Actual overhead $1,097,800 Applied overhead* Underapplied overhead $8,700 *Applied overhead $499,000 x 220% = $1,106,500. 4 No Date Credit General Journal Debit 1 Dec-31 cost of goods sold $8,700 $8,700 Factory overhead (To record adjusting entry for underapplied overhead to cost of goods sold)