Question

points

eBookHintAsk

Print

References

Check my work Check My Work button is now enabled50

Item 8

Item 8 1.81 points

Exercise 2-15 Factory overhead computed, applied, and adjusted LO P3, P4

In December 2016, Custom Mfg. established its predetermined overhead rate for jobs produced during 2017 by using the following cost predictions: overhead costs, $750,000, and direct materials costs, $625,000. At year-end 2017, the company’s records show that actual overhead costs for the year are $830,000. Actual direct material cost had been assigned to jobs as follows.

Jobs completed and sold	$	513,750
Jobs in finished goods inventory		102,750
Jobs in work in process inventory		68,500
Total actual direct materials cost	$	685,000

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.

NextVisit question map

Question 8 o

Answer 1

T- Accounts:
DEBIT	AMOUNT $	CREDIT	AMOUNT $
Raw material a/c
OB	43000	WIP	186000
Purchase	210000	Manuf. OH	15000
		CB	52000
Total	253000	Total	253000
WIP a/c
OB	10200	Cost of Goods Manuf.	625400
Material	186000	CB	21300
Pay roll	265000
Overhead	185500
Total	646700	Total	646700
FG a/c
OB	63000	COGS	652800
WIP	625400	CB	35600
Total	688400	Total	688400
Manufacturing overhead a/c
Ind mat.	15000	WIP	185500
Ind lab.	80000	Under-applied	29500
Other exp.	120000
Total	215000	Total	215000
Payroll a/c
Cash	345000	Manuf OH	80000
		WIP (DL)	265000
Income Statement:
Sales	1400000
Less:COGS	652800
Gross Profit	747200
Cost of direct material used = 186000
Cost of direct labor used = 265000
Cost of goods manufactured = 625400
Cost of Goods Sold = 652800
Gross Profit = 747200
Under applied overhead = 29500