In December 2016, Custom Mfg. established its predetermined overhead rate for jo
ID: 2538878 • Letter: I
Question
In December 2016, Custom Mfg. established its predetermined overhead rate for jobs produced during 2017 by using the following cost predictions: overhead costs, $760,000, and direct materials costs, $400,000. At year-end 2017, the company’s records show that actual overhead costs for the year are $1,002,300. Actual direct material cost had been assigned to jobs as follows.
1. Determine the predetermined overhead rate for 2017.
2&3. Enter the overhead costs incurred and the amounts applied 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.
Complete this question by entering your answers in the tabs below.
Determine the predetermined overhead rate for 2017.
Enter the overhead costs incurred and the amounts applied during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied.
Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold.
Record entry to allocate underapplied /overapplied overhead.
Jobs completed and sold $ 380,000 Jobs in finished goods inventory 83,000 Jobs in work in process inventory 60,000 Total actual direct materials cost $ 523,000Explanation / Answer
overhead rate choose numerator / Choose Denominator = overhead rate Estimated overhead costs / Estimated direct material cost = overhead rate 760,000 / 400,000 = 190% Factory overhead Actual overhead cost 1,002,300 Applied overhead cost 993700 under applied 8,600 Applied overhead = actual direct material cost *overhead rate 523000*190% 993700 Date General Journal Debit Credit 31-Dec cost of goods sold 8,600 Manufacturing overhead 8,600