In December 2016, Custom Mfg. established its predeterminedoverhead rate for jobs produced during 2017...

Free

50.1K

Verified Solution

Question

Accounting

In December 2016, Custom Mfg. established its predeterminedoverhead rate for jobs produced during 2017 by using the followingcost predictions: overhead costs, $1,550,000, and direct materialscosts, $500,000. At year-end 2017, the company’s records show thatactual overhead costs for the year are $1,624,100. Actual directmaterial cost had been assigned to jobs as follows.
Jobs completed andsold $ 400,000
Jobs in finished goodsinventory 70,000
Jobs in work in processinventory 51,000
Total actual direct materialscost $ 521,000

1. Determine the predetermined overhead rate for2017.
2&3. Enter the overhead costs incurred and theamounts applied during the year using the predetermined overheadrate and determine whether overhead is overapplied orunderapplied.
4. Prepare the adjusting entry to allocate anyover- or underapplied overhead to Cost of Goods Sold.
1.
Overhead Rate
Choose Numerator: / ChooseDenominator: = Overhead Rate
/ = Overheadrate
/ = 0
2&3.
Factory Overhead
0
4.
Date General Journal Debit Credit
Dec 31

Answer & Explanation Solved by verified expert

4.2 Ratings (882 Votes)



	OVERHEAD RATE
	Numerator	divided by	Denominator	Equalto	Overhead Rate
	Predicted overhead cost	divided by	Predicted direct material cost	Equalto	Overhead Rate
	$1,550,000	divided by	$500,000	Equalto	$ 3.10


			A=B*3.10		B
	Factory Overhead				Direct Material Cost
	Jobs completed and sold	$	$1,240,000		$400,000
	Jobs in finished goods inventory	$	$217,000		$70,000
	Jobs in work in process inventory	$	$158,100		$51,000
	Total Allocated Overhead	$	$1,615,100		$521,000

	Manufacturing Overhead Account
		Debit	Credit
	Actual Overhead cost	$1,624,100
	Applied overhead		$1,615,100
	Underapplied overhead		$9,000	(1624100-1615100)
	Balance	$9,000

Date	General Journal	Debit	Credit
31-Dec	Cost of goods sold	$9,000
	Manufacturing overhead		$9,000

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

In: AccountingIn December 2016, Custom Mfg. established its predeterminedoverhead rate for jobs produced during 2017 by...In December 2016, Custom Mfg. established its predeterminedoverhead rate for jobs produced during 2017 by using the followingcost predictions: overhead costs, $1,550,000, and direct materialscosts, $500,000. At year-end 2017, the company’s records show thatactual overhead costs for the year are $1,624,100. Actual directmaterial cost had been assigned to jobs as follows.Jobs completed andsold$400,000Jobs in finished goodsinventory70,000Jobs in work in processinventory51,000Total actual direct materialscost$521,0001. Determine the predetermined overhead rate for2017.2&3. Enter the overhead costs incurred and theamounts applied during the year using the predetermined overheadrate and determine whether overhead is overapplied orunderapplied.4. Prepare the adjusting entry to allocate anyover- or underapplied overhead to Cost of Goods Sold.1.Overhead RateChoose Numerator:/ChooseDenominator:=Overhead Rate/=Overheadrate/=02&3.Factory Overhead04.DateGeneral JournalDebitCreditDec 31


Jobs completed andsold	$	400,000
Jobs in finished goodsinventory		70,000
Jobs in work in processinventory		51,000
Total actual direct materialscost	$	521,000