Question

Check Problem 15-4A Overhead allocation and adjustment using a predetermined overhead rate LO P3, P4 In December 2016, Learer Company's manager estimated next year's total direct labor cost assuming 40 persons working an average of 2,000 hours each at an average wage rate of $30 per hour. The manager also estimated the following manufacturing overhead costs for 2017 0 Indirect labor Factory supervision Rent on factory building Factory utilities Factory insurance expired Depreciation-Factory equipment Repairs expense-Factory equipment Factory supplies used Miscellaneous production costs Total estimated overhead costs $ 340,200 110,000 101,600 107,000 87,000 473,000 79,000 87,800 55,000 $1,440,000 At the end of 2017, records show the company incurred $1.599,000 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $623,000: Job 202, $582,000; Job 203, $317,000: Job 204, $735,000; and Job 205, $333,000 In addition, Job 206 is in process at the end of 2017 and had been charged $36.000 for direct lahor No lobs were in process at the

Answer 1

Overhead cost applied 1A. Predetermined overhead rate 1B. Job No. Direct Labor Choose Numerator: Choose Denominator: 201 $623,000 $373,800 Predetermine OH Rate Predetermine overhead rate 60% Estimated overhead costs 7 Estimated direct labor cost $1,440,000/ $2,400,000 202 203 204 205 206 Total 582,000 317,000 735,000 333,000 36,000 $2,626,000 $349,200 $190,200 $441,000 $199,800 $21,600 $1,575,600 Estimated direct labor cost = [40 x 2,000 $30]=$2,400,000 OH Cost applied = {Direct Labor * 60%}

1C Factory Overhead 1D Date General Journal Debit Credit Actual Overhead cost $1,599,000 $1,575,600 Applied Overhead cost Dec. 31 Cost of Goods Sold $ 23,400 Factory Overhead $ 23,4001 Underapplied overhead $ 23,400

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