Question

10 At the beginning of the year, Custom Mfg. established its predetermined overhead rate by using the following cost predictions: overhead costs, $1,000,000, and direct materials costs, $500,000. At year-end, the company's records show that actual overhead costs for the year are $1,077,700. Actual direct materials cost had been assigned to jobs as follows. points Jobs completed and sold Jobs in finished goods inventory Jobs in work in process inventory Total actual direct materials cost $410,000 77,000 47,000 eBook Hint 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. Print Complete this question by entering your answers in the tabs below. References Req 1 Reg 2 and 3 Req 4 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. Factory Overhead 1,077,700 Actual overhead Applied overhead Underapplied overhead | 1,077.700 < Req1 Req4 >

Answer 1

1) Predetermine overhead rate = 1000000/500000 = 200% of direct material used

2&3) T account

Factory overhead
Actual overhead	1077700	1068000	Applied overhead (534000*2)
Balance	9700

Under applied overhead = $9700

4) Adjusting entry

date	account and explanation	Debit	Credit
	Cost of goods sold	9700
	Manufacturing overhead		9700
	(To record under applied overhead)