Question

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, $1,776,000,and direct labor costs, $480,000. At year-end, the company’s records show that actual overhead costs for the year are $932,400. Actual direct labor cost had been assigned to jobs as follows. Movies completed and released $ 200,000 Movies still in production 55,000 Total actual direct labor cost $ 255,000 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.

Answer 1

Answer Galwlation_of_Predebermined_overhead role for the year predetermined overheq fate is the budgeted overheqdrobe which is budgeted at the begining of the year to es total costs that would be occuwel during the period. : le Predetermined Overhead late Estimated Overhead ost a Estimated Direct labour costs X 100 $ 1776000 $ 480000 predetermined Overhead fabe 370 % 262 | Enter the amounts in T- Accounts of of factory overhead and Determination of overhead is over applied by undercupplied Infodeo Movies Inc Factory overhead Als Amt ($) To Particulars Gsh Ale (Actyy) Overheads Particulars Amt. ) _932400 By Work-in-process 1943500 f Applied overhead) C$255000 X 370%) 11100 To cost of Goods sold (Belfodinj Elgyre) love Applia) 943500 943500

The Factory Overheads are over Applied to the operations Because we can see that Infodeo has incurred $ 932400 instead of applied overheats at the begining calculated by predelavmined overbeed $943500, The overhead i que ler than budgeted predetermined overheads. Hence, they are $ 11300 over applied overheads _4 || justing entry to allocate ovex applied Overheads to ceste of goods sold. Infodeo Movies Inc Journal Entry credits : Partjualart Factory Overheq Alc _ - To cost of Goods soll (Being to record overpplied factory Debt $ _Ort i 100 J 1100 overhegy 1.11100 1100