Question

equals LILL ufacturing over the primary mate v materials (wood, bras dos overhead = 3,5 6. Compute gross profit on the cover for Sunset Construction? P4-31A Accounting for manufactur Premium Woods manufactures jewelry roducts. Manufacturing ou 8) and direct labor are assigned directly to the prod Data for 2016 follow: costs are allocated based on machine hours. Data for 20 manufacturing overhead is manufactures jewelry boxes. The primary materials hour Actual Estimated 26,500 hours urs 32.6 Machine hours Maintenance labor (repairs to equipment) Plant supervisor's salary * Screws, nails, and glue 43,000 23,000 32,600 hours $ 29,500 49,000 48,000 90,850 47,500 84,000 54,000 49,000 35,000 Plant utilities Freight out 85,000 Depreciation on plant and equipment 44,000 Advertising expense Requirements 1. Compute the predetermined overhead allocation rate. 2. Post actual and allocated manufacturing overhead to the Manufacturing Overhes T-account. 3. Prepare the journal entry to adjust for underallocated or overallocated overhead, 4. The predetermined overhead allocation rate usually turns out to be inaccurate, Why don't accountants just use the actual manufacturing overhead rate?

Answer 1

			Estimated
		Total overhead cost
		Maintenace labor	$12,000
		Plant supervisor's salary	$43,000
		Screws, nails, and glue	$23,000
		Plant utilities	$49,000
		Freight out	$35,000
		Depreciation	$85,000
		Advertising expense	$44,000
1	a)	Total overhead cost	$291,000
	b)	Machine hour	26,500
	c)	Overhead allocatio rate(a)/(b)	$11	Per Machine Hour
2				Manufacturing overhead A/c
				$291,000
			Overapplied	$66,985	W.I.P.	$357,985
				$357,985		$357,985
3		Account titles and explanation	Debit	Credit
		Manufacturing overhead	$66,985
		Cost of goods sold A/c		$66,985
		(adjusting entry for overallocated overhead)
4	Accountants use predetermined overhead to make it possible to estimate the job cost sooner.
	Further, actual overheads are incurred throughout the period and it varies monthwise hence it will be difficult to estimate job cost.