Question

At the beginning of the year, Custom Mfg. established its predetermined overhead rate by using the following cost predictions: overhead costs, $1,000,000, and direct materials costs, $400,000. At year-end, the company's records show that actual overhead costs for the year are $1,321,700. Actual direct materials cost had been assigned to jobs as follows. Jobs completed and sold Jobs in finished goods inventory Jobs in work in process inventory Total actual direct materials cost $400,000 71,000 54,000 $525,000 1. Determine the predetermined overhead rate. 2&3. Enter the overhead costs incurred and the amounts applied to jobs 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 is not complete. Complete this question by entering your answers in the tabs below. Req 1 Req 2 and 3 Req 4 Determine the predetermined overhead rate. Choose Numerator: Estimated overhead costs 1,000,000 Overhead Rate Choose Denominator: Estimated direct material costs 400,000 Overhead Rate Overhead rate i $ = 250% < Reqi Req 2 and 3 >

Answer 1

2 and 3) T account

Factory overhead
Actual overhead	1321700	1312500	Applied overhead (525000*2.5)
Balance	9200

Under applied overhead = 9200

4) Journal entry

No	Date	General Journal	Debit	Credit
a		Cost of goods sold	9200
		Factory overhead		9200