Question

Actual direct labor cost Actual overhead cost Estimated direct labor cost Estimated overhead cost

Answer 1

1.

Compute pre-determined overhead allocation rate per direct labor dollar:

Pre-determined overhead allocation rate = Estimated overhead cost / Estimated direct labor cost

Pre-determined overhead allocation rate = 120000 / 100000

Pre-determined overhead allocation rate = 120%

2.

Journal entry:

Particulars	Debit	Credit
Work in process inventory (69000*120%)	82800
Manufacturing overhead		82800
(To record allocation of overhead cost)

3.

T-account:

Manufacturing overhead
Particulars	Amount	Particulars	Amount
Actual overheads	103000	Applied overhead	82800
		Under-allocated	20200
Total	103000		103000

manufacturing overhead is under-allocated by $20200.

4.

Journal entry:

Particulars	Debit	Credit
Cost of goods sold	20200
Manufacturing overhead		20200
(To record adjusting for under-allocated overheads)