In December 2010, Gomez Company%u2019s manager estimated next year%u2019s total
ID: 2375169 • Letter: I
Question
In December 2010, Gomez Company%u2019s manager estimated next year%u2019s total direct labor cost assuming 50 persons working an average of 2,020 hours each at an average wage rate of $15 per hour. The manager also estimated the following manufacturing overhead costs for year 2011.
At the end of 2011, records show the company incurred $747,062 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $364,000; Job 202, $331,000; Job 203, $168,000; Job 204, $423,000; and Job 205, $189,000. In addition, Job 206 is in process at the end of 2011 and had been charged $11,200 for direct labor. No jobs were in process at the end of 2010. The company%u2019s predetermined overhead rate is based on direct labor cost.
Determine the predetermined overhead rate for year 2011. (Omit the "%" sign in your response.)
Determine the total overhead cost applied to each of the six jobs during year 2011. (Omit the "$" sign in your response.)
Determine the over- or underapplied overhead at year-end 2011. (Input all amounts as positive values. Omit the "$" sign in your response.)
Assuming that any over- or underapplied overhead is not material, prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold at the end of year 2011. (Omit the "$" sign in your response.)
Indirect labor $ 167,950 Factory supervision 127,000 Rent on factory building 74,000 Factory utilities 44,400 Factory insurance expired 34,500 Depreciation%u2014Factory equipment 240,000 Repairs expense%u2014Factory equipment 31,900 Factory supplies used 35,900 Miscellaneous production costs 17,000 Total estimated overhead costs $ 772,650Explanation / Answer
Predetermined Overhead Rate = 50% (725000/1500000)
.5 x DL for each job total = 736500
736500-725000= 11500
Over applied OH = 11500