Question

Chap 15 Homework At the beginning of the year, Custom Mfg. established its predetermined overhead rate by using the following cost predictions overhead costs, $300,000, and direct materials costs, $200,000. At year-end, the company's records show that actual overhead costs for the year are $841600 Actual direct materials cost had been assigned to jobs as follows 12.5 points Jobs completed and sold Jobs in inghed goods Inventory Jobs in work in process inventory Total actual direct materials cost 57,000 5555.00 1. Determine the predetermined overhead rate 283. 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 Complete this question by entering your answers in the tabs below. Re: Reg 2 and 3 Reg 4 Determine the predetermined overhead rate. Overhead Rate Choose Denominator: Choose Numerator: - Overhead Rate Overhead rate

Answer 1

Ans. 1	*Predetermined overhead rate   =   Budgeted overhead cost / Budgeted Direct materials cost
	$300,000 / $200,000 * 100
	150.00%
Ans. 2 & 3	Overhead applied = Actual direct materials cost * Predetermined overhead rate
	$555,000 * 150%
	$832,500
	Under applied overhead = Actual overhead - Applied overhead
	$841,600 - $832,500
	$9,100
	If the applied overhead is less than the Actual overhead
	it means that the overhead is under applied.
	Factory overhead
	Particulars	Amount	Particulars	Amount
	Actual overhead	$841,600	Applied overhead	$832,500
			Under applied overhead	$9,100
		$841,600		$841,600
Ans.4	Journal entry to record the under applied overhead:
Date	Particulars	Debit	Credit
31-Dec	Cost of goods sold	$9,100
	Manufacturing overhead		$9,100
	(To record under applied overhead)