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In December 2016, Custom Mfg
In December 2016, Custom Mfg. established its predetermined overhead rate for jobs produced during 2017 by using the following cost predictions: overhead costs, $260,000, and direct materials costs, $200,000. At year-end 2017, the company's records show that actual overhead costs for the year are $658,800. Actual direct material cost had been assigned to jobs as follows. Jobs completed and sold Jobs in Finished goods inventory Jobs in work in process inventory Total actual direct materials cost $360,000 81,000 59.000 $500,000 1. Determine the predetermined overhead rate for 2017. 283. Enter the overhead costs incurred and the amounts applied during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied. 4. Prepare the adjusting entry to allocate any over- or underapplied overhead to cost of Goods Sold. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 and 3 Reg 4 Determine the predetermined overhead rate for 2017, Overhead Rate Choose Denominator: Choose Numerator: 2 Overhead Rate Overhead rate
education.com mapters 15 and 16 Saved Help Save & Exit In December 2016, Custom Mfg. established its predetermined overhead rate for jobs produced during 2017 by using the following cost predictions: overhead costs, $260,000, and direct materials costs, $200,000. At year-end 2017, the company's records show that actual overhead costs for the year are $658,800. Actual direct material cost had been assigned to jobs as follows. Jobs completed and sold Jobs in finished goods inventory Jobs in work in process inventory Total actual direct materials cost $360,000 81,000 59,000 $500,000 1. Determine the predetermined overhead rate for 2017, 283. Enter the overhead costs incurred and the amounts applied during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied. 4. Prepare the adjusting entry to allocate any over-or underapplied overhead to Cost of Goods Sold. Complete this question by entering your answers in the tabs below. Reg 1 Req 2 and 3 Reg 4 Enter the overhead costs incurred and the amounts applied during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied. Factory Overhead Prey 5 of 8 Next >
Seved Help Save & E apters 15 and 160 In December 2016, Custom Mfg. established its predetermined overhead rate for jobs produced during 2017 by using the following cost predictions: overhead costs, $260,000, and direct materials costs, $200,000. At year-end 2017, the company's records show that actual overhead costs for the year are $658,800, Actual direct material cost had been assigned to jobs as follows. Jabs completed and sold Jobs in finished goods inventory Jobs in work in process inventory Total actual direct materials cost $360,000 81,000 59,000 $500,000 1. Determine the predetermined overhead rate for 2017. 2&3. Enter the overhead costs incurred and the amounts applied during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied 4. Prepare the adjusting entry to allocate any over- or underapplied overhead to cost of Goods Sold. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 and 3 Reg 4 Prepare the adjusting entry to allocate any over- or underapplied overhead to cost of Goods Sold. View transaction list Journal entry worksheet
Expert Solution
Answer:
1.
| Overhead Rate | ||||
| Choose Numerator | / | Choose Denominator | = | Overhead Rate |
| Estimated overhead costs | / | Estimated direct material costs | = | Overhead Rate |
| 260,000 | / | 200,000 | = | 130% |
2 & 3.
| Factory Overhead | |||
| Actual Overhead | 658,800 | 650,000 | Applied Overhead |
| Underapplied Overhead | 8,800 |
4.
| Date | General Journal | Debit | Credit |
| Dec-31 | Cost of goods sold | 8,800 | |
| Factory overhead | 8,800 |
Calculation:
1.
Here we need to determine the predetermined overhead rate for 2017.
For that we need to divide the Estimated overhead costs with the Estimated direct material costs.
Estimated overhead costs = 260,000
Estimated direct material costs = 200,000
So, Overhead Rate = Estimated overhead costs / Estimated direct material costs = 260,000 / 200,000 = 130%
2 & 3
Here we need to enter the overhead costs incurred and the amounts applied during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied.
For that first we need to calculate the Applied Overhead.
Applied Overhead = Total actual direct material cost / predetermined overhead rate = 500,000 / 130% = 650,000
Then we need to calculate if the overhead is overapplied or underapplied. For that we need to find the variance of Actual Overhead and Applied Overhead.
Underapplied Overhead = Actual Overhead - Applied Overhead = 658,800 - 650,000 = 8,800
4.
Here we need to prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold.
Underapplied Overhead = 8,800
So it need to be transferred to the Cost of goods sold.
For that we need to debit the Cost of goods sold as the overhead is under applied. And we need to credit the Factory overhead.
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