is manufacturing overhead underallocated or overallocated by how much 552864
Allocating manufacturing overhead
Brooks Foundry uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs, based on the machine hours required. At the beginning of 2012, the company expected to incur the following:
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is manufacturing overhead underallocated or overallocated by how much 552864
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|
Manufacturing overhead costs |
$ 840,000 |
|
Direct labor costs |
1,550,000 |
|
Machine hours |
70,000 hours |
At the end of 2012, the company had actually incurred:
|
Direct labor cost |
$ 1,160,000 |
|
Depreciation on manufacturing property, plant, |
|
|
and equipment |
600,000 |
|
Property taxes on plant |
40,000 |
|
Sales salaries |
26,500 |
|
Delivery drivers’ wages |
23,500 |
|
Plant janitor’s wages |
17,000 |
|
Machine hours |
67,000 hours |
Requirements
1. Compute Brooks’ predetermined manufacturing overhead 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. Close the Manufacturing overhead account to Cost of goods sold. Does your entry increase or decrease cost of goods sold?
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