Problem
A manufacturer has the following information:
Budgeted or estimated Mfg OH costs = $16,800
Estimated Direct Labor hours by plant workers = 5000; Plant worker wages = $16/hour, budget & actual.
Estimated Machine Hours = 2500
Actual Mfg OH costs for the period = $16,297
Actual Machine Hours = 2583
Actual Direct Labor hours by plant workers = 5014
The predetermined overhead rate is based on estimated total direct labor cost (not just the hourly wage).
What is the predetermined overhead rate for manufacturing overhead?
Predetermined overhead rate= $16800/$80000=$.21/ $1 of direct labor
What is the amount of applied manufacturing overhead?
Applied manufacturing overhead=$0.21x$80,224=$16,847.04
What is the overapplied or underapplied manufacturing overhead?
Show the journal entry in debit and credit form to apply manufacturing overhead.
Show the journal entry in debit and credit form to adjust for underapplied or overapplied overhead.