Problem 5 (Textbook Reference: P2-6) - Compute predetermined overhead rate and t
ID: 2328151 • Letter: P
Question
Problem 5 (Textbook Reference: P2-6) - Compute predetermined overhead rate and transfer under-or-overapplied overhead to cost of goods sold Speedy Delivery, Inc., transports computer equipment for various computer manufacturers. Speedy applies overhead to jobs using a predetermined overhead rate based on truck miles. Estimated data for 2014 are Estimated truck miles Estimated overhead for hauling operations (equivalent to manufacturing overhead) 20 million S12 ion Required Compute the predetermined overhead rate per mile Assume that in 2014, actual manufacturing overhead for hauling operations amounted to $15 million, and 24 million truck miles were driven. Compute the amount of underapplied or overapplied manufacturing overhead for 2014 Prepare the journal entry to transfer underapplied or overapplied overhead to Cost of Goods Sold. a. b. c. Hint: Utilize a I-Account Manufacturing Overhead Actual Overhead Applied Overhead PDOHR x Actual OH Driver * Ahways use Applied OH in WIP Debit Balance- Underapplied Credit Balance- Overapplie«d Add to endng COGS Subract from ending COGS Predetermined OH Rate Estimated overhead costs / Estimated overhead driver (such as machine-hours) Fall 2018 - Due Thursday, September 6Explanation / Answer
a Predetermined overhead rate = Estimated Overhead costs/Estimated overhead driver = 12000000/20000000= $0.60 per truck mile b Manufacuring overhead Actual overhead Applied overhead 15000000 14400000 Underapplied overhead $600000 c Cost of goods sold 600000 Manufacturing overhead 600000