Question

Aspen Company estimates its manufacturing overhead to be $608,400 and its direct labor costs to be $507,000 for year 2. Aspen worked on three jobs for the year. Job 2-1, which was sold during year 2, had actual direct labor costs of $272,000. Job 2-2, which was completed, but not sold at the end of the year, had actual direct labor costs of $340,000. Job 2-3, which is still in work-in-process inventory, had actual direct labor costs of $68,000. Actual manufacturing overhead for year 2 was $802,700. Manufacturing overhead is applied on the basis of direct labor costs.

Required:

Prepare an entry to allocate over- or underapplied overhead to Work in Process, Finished Goods and Cost of Goods Sold. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

Transaction Index :

• Record the allocation of over- or underapplied overhead.

Note: Enter debits before credits.

	Transaction General Journal Debit Credit 1 Applied manufacturing overhead Work-in-process inventory Finished goods inventory Cost of good sold

+

Answer 1

Predetermined Overhead rate	120%		=608400/507000
Applied manufacturing overhead:
Job 2-1	326400		=272000*120%
Job 2-2	408000		=340000*120%
Job 2-3	81600		=68000*120%
Applied manufacturing overhead	816000
Over-applied manufacturing overhead	13300		=816000-802700
General Journal	Debit	Credit
Applied manufacturing overhead	816000
Work­ in­ process inventory		5320	=13300/816000*326400
Finished goods inventory		6650	=13300/816000*408000
Cost of goods sold		1330	=13300/816000*81600
Manufacturing overhead control		802700