Question

At the beginning of the year, Custom Mfg established its predetermined overhead rate by using the following cost predictions: overhead costs, $900,000, and direct materials costs, $500,000. At year-end, the company's records show that actual overhead costs for the year are $984,600. Actual direct materials cost had been assigned to jobs as follows. Jobs completed and sold Jobs in finished goods inventory Jobs in work in process inventory 59,000 $400,000 83,000 Total actual direct materials $542,000 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 Complete this question by entering your answers in the tabs below. Req 1 Req 2 and 3 Req 4 Determine the predetermined overhead rate. Overhead Rate

Answer 1

Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!

Custom mfg.
Answer 1
Calculation of predetermined overhead rate:				Note
Overhead costs	900,000.00			A
Direct Materials	500,000.00			B
Predetermined overhead rate:	180.00%			C=A/B
Predetermined overhead rate is 180% of Direct Materials cost.
Answer 2 and 3
Actual Direct Materials costs	542,000.00			D
Predetermined overhead rate:	180.00%			See C
Overhead cost allocated	975,600.00			E=D*C
Actual Overhead cost incurred	984,600.00			F
Overhead under applied	9,000.00			G=F-E
Answer 4	Journal Entry
Account	Debit $	Credit $
Cost of Good sold	9,000.00			See G
Overhead costs		9,000.00		See G