Question

Exercise 15-16 Factory overhead computed, applied, and adjusted LO P3, P4 In December 2016, Infodeo established its predetermined overhead rate for movies produced during 2017 by using the following cost predictions: overhead costs, $2,142,000,and direct labor costs, $420,000. At year-end 2017, the company's records show that actual overhead costs for the year are $2,278,000. Actual direct labor cost had been assigned to jobs as follows. Movies completed and released Movies still in production $400,000 49,000 Total actual direct labor cost $449,000 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. Complete this question by entering your answers in the tabs below. Req 1 Req 2 and 3 Reg 4 Determine the predetermined overhead rate for 2017. Overhead Rate Choose Numerator: Choose Denominator: Overhead Rate Overhead rate Reg 1 Reg 2 and 3 >

Answer 1

Answer -

1. Answer -

Overhead rate
Choose numerator:	/	Choose denominator:	=	Overhead rate
Estimated overhead costs	/	Estimated direct labor costs	=	Overhead rate
$2142000	/	$420000	=	510%

Calculation:

Predetermined overhead rate:

= Estimated overhead costs / Estimated direct labor costs

= $2142000 / $420000

= 5.1 or 510%

2. & 3. Answer -

Factory overhead
Actual overhead	$2278000
		Overhead applied	$2289900
		Overapplied overhead	$11900

Calculation:

a. Overhead applied:

= Total actual direct labor costs * Predetermined overhead rate

= $449000 * 510%

= $2289900

b. Overapplied overhead:

= Actual overhead - Overhead applied

= $2278000 - $2289900

= $11900

4. Answer -

Date	General Journal	Debit	Credit
Dec. 31	Factory overhead	$11900
	Cost of goods sold		$11900