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At the beginning of 2016, the company expected to incur the following: Manufacturing overhead costs $850,000 Direct labor costs 1,500,000 Machine hours 85,000 hours At the end of 20162016​,

At the beginning of 2016, the company expected to incur the following:

 

Manufacturing overhead costs

$850,000

 
 

Direct labor costs

1,500,000

 
 

Machine hours

85,000

hours

At the end of

20162016​,

the company had actually​ incurred:

Direct labor cost

$1,210,000

 

Depreciation on manufacturing plant and equipment

560,000

 

Property taxes on plant

39,500

 

Sales salaries

25,000

 

Delivery drivers' wages

20,500

 

Plant janitor's wages

19,000

 

Machine hours

69,000

hours

MartinezMartinez

Foundry uses a predetermined overhead allocation rate to allocate overhead to individual​ jobs, based on the machine hours required.

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​(Click

the icon to view the​ costs.)

Requirements

1.

Compute

Martinez'Martinez'

predetermined overhead allocation rate.

2.

Prepare the journal entry to allocate manufacturing overhead.

3.

Post the manufacturing overhead transactions to the Manufacturing Overhead​ T-account. Is manufacturing overhead underallocated or​ overallocated? By how​much?

4.

Prepare the journal entry to adjust for the underallocated or overallocated manufacturing overhead. Does your entry increase or decrease cost of goods​ sold?

Requirement 1. Compute

Martinez'Martinez'

predetermined overhead allocation rate.

       

Predetermined overhead

Estimated overhead cost

/

Estimated machine hours

=

allocation rate

$850,000

/

85,000

=

$10

per machine hour

Requirement 2. Prepare the journal entry to allocate manufacturing overhead. ​(Record debits​ first, then credits. Exclude explanations from any journal​ entries.)

  

Date

Accounts

Debit

Credit

Dec. 31

Work-in-Process Inventory

690,000

 
 

Manufacturing Overhead

 

690,000

           
           

Requirement 3. Post the manufacturing overhead transactions to the​ T-account and calculate the balance. ​(Enter amounts in the order they appear in the cost data using the first available line in the​ T-account. Enter the ending balance on the last​ line.)

Manufacturing Overhead

       
       
       
     

Jul 05 2021 View more View Less

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