Question

Check At the beginning of the year, Custom Mfg. established its predetermined overhead rate by using the following cos predictions: overhead costs, $1,500,000, and direct materials costs, $500,000. At year-end, the company's record show that actual overhead costs for the year are $1,626,700. Actual direct materials cost had been assigned to job follows. Jobs completed and sold Jobs in finished goods inventory Jobs in work in process inventory Total actual direct materials cost $420,000 74,000 45,000 $539,000 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. Reg 1 Reg 2 and 3 Reg 4

Answer 1

Solution:

1.)

Overhead Rate:

Choose Numerator	/	Choose Denominator	=	Overhead Rate
Estimated overhead costs	/	Estimated direct materials costs	=	Overhead Rate
$1,500,000	/	$500,000	=	300%

2.&3.)

	Factory Overhead
Actual overhead	$1,626,700	$1,617,000 ($539,000 × 300%)	Applied overhead
Underapplied overhead	$9,700

​​​​4.)

No.	Date	Account Title and Explanation	Debit ($)	Credit ($)
1.	Dec.31	Cost of goods sold	9,700
		Manufacturing overhead		9,700
		( To record under applied overhead)

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