At the beginning of the year, Custom Mfg. established its
predetermined overhead rate by using the following cost
predictions: overhead costs, $920,000, and direct materials costs,
$400,000. At year-end, the company’s records show that actual
overhead costs for the year are $1,089,600. Actual direct materials
cost had been assigned to jobs as follows.
Jobs completed and sold | $ | 350,000 | |
Jobs in finished goods inventory | 72,000 | ||
Jobs in work in process inventory | 48,000 | ||
Total actual direct materials cost | $ | 470,000 | |
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.
1. Predetermined overhead rate = Budgeted overhead cost / Budgeted Direct materials cost
$920,000 / $400,000 * 100
230%
2&3. Overhead applied = Actual direct materials cost * Predetermined overhead rate
$470,000 * 230%
$10,81,000
Under applied overhead = Actual overhead - Applied overhead
$1,089,600 - $1,081,000
$8,600
If the applied overhead is less than the Actual overhead
it means that the overhead is under applied.
Factory overhead
Particulars | amount | particulars | amount |
Actual overhead | $1,089,600 | applied overhead | $1,081,000 |
Underapplied overhead | $8,600 | ||
$1,089,600 | $1,089,000 |
4. Journal entry to record the under applied overhead
Date Particulars Debit Credit
31-Dec Cost of goods sold $8,600
Manufacturing overhead $8,600
(under applied overhead transferred to cost of goods sold account)
At the beginning of the year, Custom Mfg. established its predetermined overhead rate by using the...
At the beginning of the year, Custom Mfg. established its predetermined overhead rate by using the following cost predictions: overhead costs, $1,860,000, and direct materials costs, $600,000. At year-end, the company's records show that actual overhead costs for the year are $1,537,800. Actual direct materials cost had been assigned to jobs as follows. Jobs completed and sold Jobs in finished goods inventory Jobs in work in process inventory Total actual direct materials cost $370,000 77,000 46,000 $493,000 1. Determine the...
At the beginning of the year, Custom Mfg. established its predetermined overhead rate by using the following cost predictions: overhead costs, $360,000, and direct materials costs, $200,000. At year-end, the company’s records show that actual overhead costs for the year are $937,800. Actual direct materials cost had been assigned to jobs as follows. Jobs completed and sold $ 380,000 Jobs in finished goods inventory 76,000 Jobs in work in process inventory 60,000 Total actual direct materials cost $ 516,000 1....
At the beginning of the year, Custom Mfg. established its predetermined overhead rate by using the following cost predictions: overhead costs, $1,080,000, and direct materials costs, $600,000. At year-end, the company’s records show that actual overhead costs for the year are $957,800. Actual direct materials cost had been assigned to jobs as follows. Jobs completed and sold $ 400,000 Jobs in finished goods inventory 78,000 Jobs in work in process inventory 49,000 Total actual direct materials cost $ 527,000 1....
At the beginning of the year, Custom Mfg. established its predetermined overhead rate by using the following cost predictions: overhead costs, $780,000, and direct materials costs, $300,000. At year-end, the company’s records show that actual overhead costs for the year are $1,350,600. Actual direct materials cost had been assigned to jobs as follows. Jobs completed and sold $ 390,000 Jobs in finished goods inventory 70,000 Jobs in work in process inventory 56,000 Total actual direct materials cost $ 516,000 1....
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, $400,000. At year-end, the company's records show that actual overhead costs for the year are $1,321,700. Actual direct materials cost had been assigned to jobs as follows. Jobs completed and sold Jobs in finished goods inventory Jobs in work in process inventory Total actual direct materials cost $400,000 71,000 54,000 $525,000 1. Determine the...
At the beginning of the year, Custom Mfg. established its predetermined overhead rate by using the following cost predictions: overhead costs $960,000, and direct materials costs, $400,000. At year-end, the company's records show that actual overhead costs for the year are $1,183,500. Actual direct materials cost had been assigned to jobs as follows. Jobs completed and sold Jobs in finished goods inventory Jobs in work in process inventory Total actual direct materials cost $350,000 84,000 55,000 $489,000 1. Determine the...
At the beginning of the year, Custom Mfg established its predetermined overhead rate by using the following cost predictions: overhead costs, $900,000, and direct materials costs, $500,000. At year-end, the company's records show that actual overhead costs for the year are $984,600. Actual direct materials cost had been assigned to jobs as follows. Jobs completed and sold Jobs in finished goods inventory Jobs in work in process inventory 59,000 $400,000 83,000 Total actual direct materials $542,000 cost 1. Determine the...
At the beginning of the year, Custom Mfg established its predetermined overhead rate by using the following cost predictions: overhead costs $510,000, and direct materials costs, $300,000. At year-end, the company's records show that actual overhead costs for the year are $948.200. Actual direct materials cost had been assigned to jobs as follows. $410,000 Jobs completed and sold Jobs in Finished goods Inventory Jobs in work in process inventory Total actual direct materials cost 59.000 $552.000 1. Determine the predetermined...
At the beginning of the year, Custom Mfg. established its predetermined overhead rate by using the following cost predictions: overhead costs, $640,000, and direct materials costs, $200,000. At year-end, the company's records show that actual overhead costs for the year are $1,614,600. Actual direct materials cost had been assigned to jobs as follows. Jobs completed and sold Jobs in finished goods inventory Jobs in work in process inventory Total actual direct materials cost $370,000 81,000 51,000 $502,000 1. Determine the...
At the beginning of the year, Custom Mfg. established its predetermined overhead rate by using the following overhead costs, $900,000, and direct materials costs, $300,000. At year-end, the company's records show tha for the year are $1,632,800. Actual direct materials cost had been assigned to jobs as follows. Jobs completed and sold $420,000 Jobs in finished goods inventory 73,000 Jobs in work in process inventory 48,000 Total actual direct materials $541,000 cost 1. Determine the predetermined overhead rate. 2&3. Enter...