Question

1 At the beginning of the year, Infodeo established its predetermined overhead rate for movies produced during the year by using the following cost predictions: overhead costs, $1,476,000,and direct labor costs, $410,000. At year-end, the company's records show that actual overhead costs for the year are $1,925,400. Actual direct labor cost had been assigned to jobs as follows. $5e0,eee 38,000 Movies completed and released Movies still in production 12 points Total actual direct labor cost $538,000 02:41:51 1. Determine the predetermined overhead rate for the year. 2&3. Enter the overhead costs incurred and the amounts applied to movies 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 and 3 Req 4 Determine the predetermined overhead rate for the year. Overhead Rate Choose Nume rator: Choose Denominator: Overhead Rate Overhead rate -

Answer 1

A predetermined overhead rate is the rate used to apply manufacturing overhead to work in process inventory. The predetermined overhead rate is calculated before the periods begin.

Solution:

1.)

Overhead Rate =$3.6 per labor dollar

Choose Numerator	/	Choose Dominator	=	Overhead Rate
Estimated Overhead costs	/	Estimated labor costs	=	Overhead Rate
$1,476,000	/	$410,000	=	$3.6

2. & 3.)

Actual overhead	$1,925,400
Applied overhead	$1,936,800
Overhead over applied	($11,400)

Applied overhead =labor incurred × overhead rate

=$538000×$3.6 =$1,936,800

Overhead variance =Actual - applied overhead

=$1,925,400 - $1,936,800

=($11,400)

* This is over applied overhead because applied overhead is more than actual overhead.

4.) General journal

Date	General journal	Debit	Credit
Dec. 31	Overhead Control	$11,400
	Cost of goods sold		$11,400
	(To record over applied overhead)