why don rsquo t accountants just use the actual manufacturing overhead rate 552872
Accounting manufacturing overhead
White Woods manufactures jewelry boxes. The primary materials (wood, brass, and glass) and direct labor are traced directly to the products. Manufacturing overhead costs are allocated based on machine hours. Data for 2012 follow:
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why don rsquo t accountants just use the actual manufacturing overhead rate 552872
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|
Estimated (Budget) |
Actual |
|
|
Machine hours |
25,000 hours |
32,100 hours |
|
Maintenance labor (repairs to equipment) |
$12,000 |
28,500 |
|
Plant supervisor’s salary |
47,000 |
48,000 |
|
Screws, nails, and glue |
24,000 |
45,000 |
|
Plant utilities |
41,000 |
96,850 |
|
Freight out |
37,000 |
46,500 |
|
Depreciation on plant and |
||
|
equipment |
87,000 |
83,000 |
|
Advertising expense |
43,000 |
54,000 |
Requirements
1. Compute the predetermined manufacturing overhead rate.
2. Post actual and allocated manufacturing overhead to the Manufacturing overhead T-account.
3. Close the under- or overallocated overhead to Cost of goods sold.
4. The predetermined manufacturing overhead rate usually turns out to be inaccurate. Why don’t accountants just use the actual manufacturing overhead rate?
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