In December 2010, Gomez Company’s manager estimated next year’s total direct lab
ID: 2513605 • Letter: I
Question
In December 2010, Gomez Company’s manager estimated next year’s 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 $723,096 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $348,000; Job 202, $324,000; Job 203, $167,000; Job 204, $416,000; and Job 205, $174,000. In addition, Job 206 is in process at the end of 2011 and had been charged $10,600 for direct labor. No jobs were in process at the end of 2010. The company’s predetermined overhead rate is based on direct labor cost.
Determine the predetermined overhead rate for year 2011. (Omit the "%" sign in your response.)
Determine the total overhead cost applied to each of the six jobs during year 2011. (Omit the "$" 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.)
In December 2010, Gomez Company’s manager estimated next year’s 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.
Explanation / Answer
1a) predetermined overhead rate estimated MOH/estimated direct labor cost 772,650/(50*2020*15) 51.00% 1b) total overhead cost applied = direct labor cost of each job*51% Job No 201 177480 202 165240 203 85170 204 212160 205 88740 206 5406 total 734196 1c) Actual overhead 723,096 Applied overhead 734196 overhead over applied by 11,100 2) Date General journal Debit Credit 31-Dec Maufacturing overhead 11,100 Cost of goods sold 11,100