Question

In December 2016, Infodeo established its predetermined overhead rate for movies produced during 2017 by using the following cost predictions: overhead costs, $1,750,000, and direct labor costs, $500,000. At year-end 2017, the company's records show that actual overhead costs for the year are $1,171,100. Actual direct labor cost had been assigned to jobs as follows. Movies completed and released Movies still in production Total actual direct labor cost $300,000 38,000 $338,000 1. Determine the predetermined overhead rate for 2017 283. 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 Reg 2 and 38 Reg 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. Actual overhead 1,171,100 1,183,000 (Applied overhead 11,900 Overapplied overhead 23,800 < Reg 1 Req 4 >

Answer 1

	1)		Predetermined overhead rate
	Estimated Overhead costs	/	Estimated direct labor costs	=	Overhead rate
	$ 1,750,000	/	$ 500,000	=	350% of Direct Labor Costs
	2 and 3)
		Factory Overhead
	Actual overhead	$ 1,171,100	$ 1,183,000 ( $ 338,000 x 350% )	Applied Overhead
			$ 11,900	Overapplied overhead
Date	General Journal	Debit	Credit
Dec. 31	Factory overhead	$ 11,900
	Cost of goods sold		$ 11,900
	(To record the Underapplied overhead)