Question

At the beginning of the year, Learer Company's manager estimated total direct labor cost assuming 40 persons working an average of 2,500 hours each at an average wage rate of $20 per hour. The manager also estimated the following manufacturing overhead costs for the year. Indirect labor 320,200 111,000 141,000 89,000 69,000 402,000 61,000 Factory supervision Rent on factory building Factory utilities Factory insurance expired Depreciation-Factory equipment Repairs expense-Factory equipment Factory supplies used Miscellaneous production costs 69,800 37,000 $1,300,000 Total estimated overhead costs At year-end, records show the company incurred $1,665,000 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $605,000; Job 202, $564,000; Job 203, $299,000; Job 204, $717,000; and Job 205, $315,000. In addition, Job 206 is in process at the end of the year and had been charged $18,000 for direct labor. No jobs were in process at the beginning of the year. The company's predetermined overhead rate is based on direct labor cost. Required 1-a. Determine the predetermined overhead rate for the year. 1-b. Determine the total overhead cost applied to each of the six jobs during the year. 1-c. Determine the over- or underapplied overhead at the year-end 2. Assuming that any over- or underapplied overhead is not material, prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold at the end of the year Req 2 Req IA Req IB Req IC Determine the total overhead cost applied to each of the six jobs during the Direct Labor Overhead cost applied Job No. $ 605,000 564,000 201 202 299,000 203 204 717,000 205 315,000 18,000 206 S 2,518,000 $ Total Req IB Req IA Req IC Req 2 Determine the over- or underapplied overhead at the year-end Factory Overhead 1,665,000 Applied overhead cost Actual overhead cost 1,665,000 Assuming that any over- or underapplied overhead is not material, prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold at the end of the year View journal entry worksheet View transaction list No Date General Journal Debit Credit Cost of goods sold 1 Dec 31 Factory overhead

Answer 1

ans 1 Predetermined overhead rate
estimated overhead rate/Estimted direct labor cost
1300000/(2500*40*20)	0.650
ans 1b
Total overhead cost apllied
Job	Direct labor cost	applied rate	Overhead cost applied
201	$605,000	0.65	$393,250
202	564000	0.65	$366,600
203	299000	0.65	$194,350
204	717000	0.65	$466,050
205	315000	0.65	$204,750
206	18000	0.65	$11,700
	$2,518,000	Total	$1,636,700
ans 1c
Underapplied
Actual	$1,665,000
Less: Applied	$1,636,700
Underapplied	$28,300
Factory Overhead
Actual	$1,665,000	Applied	$1,636,700
End bal	$28,300
31-Dec
Cost of good sold	$28,300
Factory overhead		$28,300
If any doubt please comment. If satisfied rate