Question

In December 2016. Custom Mig established its predetermined overhead rate for jobs produced during 2017 by using the following cost predictions overhead costs, $360,000, and direct materials costs, $200.000. At year-end 2017, the company's records show th actual overhead costs for the year are $921,300. Actual direct material cost had been assigned to jobs as follows. Jobs completed and sold Jobs in finished goods Inventory Jobs in work in process inventory Total actual direct materials cost $370,000 84, 53.00 $50,00 1. Determine the predetermined overhead rate for 2017 2&3. Enter the overhead costs incurred and the amounts applied 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 Reg 2 and 3 Reg 4 Determine the predetermined overhead rate for 2017 Overhead Rate Choose Denominator: Choose Numerator: Overhead Rate Overhead rate Reg 2 and 3 >

Answer 1

1) Predetermine overhead rate

Estimated overhead	/	Estimated direct material used	=	Overhead rate
360000	/	200000	=	180% of direct material used

2) Factory overhead T account

Actual overhead	921300	Applied overhead (507000*1.8)	912600
Balance	8700

3) Journal entry

Date	account and explanation	Debit	Credit
	Cost of goods sold	8700
	Manufacturing overhead		8700
	(To record under applied overhead)