Ans. 1 | *Predetermined overhead rate = Budgeted overhead cost / Budgeted Direct materials cost | |||
$1,560,000 / $600,000 * 100 | ||||
260.00% | ||||
Ans. 2 & 3 | Overhead applied = Actual direct materials cost * Predetermined overhead rate | |||
$536,000 * 260% | ||||
$1,393,600 | ||||
Under applied overhead = Actual overhead - Applied overhead | ||||
$1,403,200 - $1,393,600 | ||||
$9,600 | ||||
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 | $1,403,200 | Applied overhead | $1,393,600 | |
Under applied overhead | $9,600 | |||
$1,403,200 | $1,403,200 | |||
Ans.4 | Journal entry to record the under applied overhead: | |||
Date | Particulars | Debit | Credit | |
31-Dec | Cost of goods sold | $9,600 | ||
Manufacturing overhead | $9,600 | |||
(under applied overhead transferred to cost of goods sold account) | ||||
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