Question

departments, brewing and packaging. The brewing department allocates overhead based on batches produced while the packaging department allocates overhead to orders based on machine hours worked in the department. The estimated overhead for the brewing department for the year is $24331 and the packaging department is estimated at $14342. It is estimated that the brewery will produce 282 batches during the year and will spend 1251 hours running the equipment to package those batches. At the end of the year, it is determined that 315 batches were actually produced and 1424 were used to package the product. The overhead amounts actually incurred by the brewing and packaging departments were $18692 and $13922 respectively. What is the entry into the overhead account at the end of the year to balance the account? A credit would be entered as a negative and a debit as a positive. Round your answer to the whole dollar.

Answer 1

	Brewing	Packaging	Total overhead allocated
Overhead Rate	24331/282 =$ 86.28	14342/1251 =$ 11.46
Overhead Allocated (actual activity*overhead rate)	315*86.28= 27178.2	1424*11.46 =$ 16319.04
Actual overhead	18692	13922
(Underapplied )/Overapplied	27178.2-18692= 8486.2	16319.04-13922 = 2397.04

Overhead Allocation Rate =Estimated overhead /Estimated activity

Date	Account title	Debit	credit
	Manufacturing overhead -Brewing	8486
	Manufacturing overhead-packaging	2397
	Cost of goods sold		10883
	[To close overapplied overhead]