FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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At the beginning of the year, Custom Mfg. established its predetermined
cost predictions: overhead costs, $750,000, and direct materials costs, $625,000. At year-end, the
company’s records show that actual overhead costs for the year are $830,000. Actual direct materials cost
had been assigned to jobs as follows.
Jobs completed and sold $513,750
Jobs in finished goods inventory 102,750
Jobs in work in process inventory 68,500
Total actual direct materials cost $685,000
1. Determine the predetermined overhead rate using predicted direct materials costs.
2. Set up a T-account for Factory Overhead and enter the overhead costs incurred and the amounts
applied to jobs during the year using the predetermined overhead rate.
3. Determine whether overhead is overapplied or underapplied (and the amount) during the year.
4. Prepare the
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- A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $349,700 and direct labor hours would be 40,000. Actual manufacturing overhead costs incurred were $300,400, and actual direct labor hours were 52,900. What is the predetermined overhead rate per direct labor hour?arrow_forwardHarris Fabrics computes Its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 36,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $501,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $3.00 per direct labor-hour. Harris's actual manufacturing overhead cost for the year was $677,683 and its actual total direct labor was 36,500 hours. Required: Compute the company's plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.) Predetermined overhead rate per DLHarrow_forwardAt the beginning of the year, a company estimated a predetermined plantwide overhead rate of 140% of direct labor cost. Job X was charged $200 and $250 for direct materials and direct labor, respectively. What is the total job cost for Job X? Multiple Cholce $850 $800 $600 $550arrow_forward
- Linzee Liners estimates that its manufacturing overhead will be $1,725,000 in Year 1. It further estimates that direct labor costs will amount to $750,000. During March, Linzee worked on four jobs with actual direct labor costs of $35,000 for Job 0301, $22,500 for Job 0302, $32,000 for Job 0303, and $16,000 for Job 0304. Actual manufacturing overhead costs for the year were $1, 710,000. Actual direct labor costs for the year were $735,000. Manufacturing overhead is applied to jobs based on direct labor costs using predetermined rates. The amount of overhead applied in each of the inventory accounts at the end of Year 1 is as follows: Work-in-process inventory $ 33,810 Finished goods inventory $ 270,480 Cost of goods sold $ 1,386, 210 Required: Prepare an entry to allocate the over- or underapplied overhead. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.arrow_forwardHenderson Industries applies manufacturing overhead to its jobs based on a predetermined overhead rate, which is calculated using direct labor costs. The following data pertains to Henderson Industries' Work in Process inventory for the month of April: April 1 balance: $ 26,000 Debits during April: Direct Materials: $40,000 Direct Labor: $50,000 Manufacturing Overhead: $37, 500 Throughout April, the company's Work in Process inventory account received credits totaling $120, 500, representing the Cost of Goods Manufactured for the month. By April 30, only one job was still in process, having accumulated $9, 600 in applied overhead costs. The question is, what is the direct materials cost in this unfinished job? The options are: Group of answer choices $10, 600 $16, 700 $12, 800 $23, 400arrow_forwardMartin Manufacturing assigns overhead to jobs based on machine hours. At the beginning of the current year, estimated overhead costs were $200,000 and estimated machine hours were 40,000. During the year, 140 machine hours were used on Job 88. By the end of the year, actual overhead costs were calculated to be $202,500 and actual machine hours were 45,000.How much overhead was applied to Job 88 during the year?arrow_forward
- Blue Sky Soda estimates total factory overhead costs of $4,200,000 and total direct labor costs of $2,800,000 for its first year of operations. During January, the company used $80,000 of direct labor cost in its Blending department and $60,000 of direct labor cost in its Bottling department. Compute the predetermined overhead rate as a percentage of direct labor cost. Prepare the journal entry to apply factory overhead to the Blending and Bottling departments. Complete this question by entering your answers in the tabs below. Required 2 Prepare the journal entry to apply factory overhead to the Blending and Bottling departments. Journal entry worksheet 1 Record the entry to apply overhead to production Note: Enter debits before credits. Prev. 5 of 5 Next Type here to searcharrow_forwardA company estimates its manufacturing overhead will be $525,000 for the next year. What is the predetermined overhead rate given the following independent allocation bases? When required, round your answers to nearest cent. A. Budgeted direct labor hours: 42,000 per direct labor hour B. Budgeted direct labor expense: $1,050,000 per direct labor dollar C. Estimated machine hours: 70,000 per machine hourarrow_forwardHenkes Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the labor-hours for the upcoming year at 65,000 labor-hours. The estimated variable manufacturing overhead was $8.10 per labor-hour and the estimated total fixed manufacturing overhead was $1,092,000. The actual labor-hours for the year turned out to be 67,800 labor-hours. Required: Compute the company's predetermined overhead rate for the recently completed year Note: Round your answer to 2 decimal places. Predetermined overhead rate per labor-hourarrow_forward
- Henkes Corporation bases its predetermined overhead rate on the estimated labor-hours for the upćoming year. At the beginning of the most recently completed year, the company estimated the labor-hours for the upcoming year at 80,000 labor-hours. The estimated variable manufacturing overhead was $10.70 per labor-hour and the estimated total fixed manufacturing overhead was $1,440,000. The actual labor-hours for the year turned out to be 84,000 labor-hours. Required: Compute the company's predetermined overhead rate for the recently completed year. (Round your answer to 2 decimal places.) Predetermined overhead rate per labor-hourarrow_forwardHarris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 43,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $537,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour, Harris's actual manufacturing overhead cost for the year was $702,019 and its actual total direct labor was 43,500 hours. Required: Compute the company's plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.) Predetermined overhead rate per DLHarrow_forwardRichey Company uses an actual cost accounting system that applies overhead on the basis of direct labor hours. At the beginning of the year, management estimated that during the year, the company would work 26,000 direct labor hours and budgeted $1,300,000 for MOH. The company actually worked 24,000 direct labor hours and incurred the following actual manufacturing costs: Direct materials used in production $1,240,000 Direct labor 1,800,000 Indirect labor 300,000 Indirect materials 220,000 Insurance 150,000 Utilities 190,000 Repairs and Maintenance 180,000 Depreciation 320,000 Determine the amount of underapplied or overapplied overhead for the year.arrow_forward
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