Jamison Woodworking uses normal costing and allocates manufacturing overhead to jobs based on a budgeted labor-hour rate and actual direct labor-hours. Under- or overallocated overhead, if immaterial, is written off to Cost of Goods Sold. During 2014, Jamison recorded the following:Budgeted Manufacturing overhead costs $4,400,000Budgeted direct labor-hours 200,000Actual manufacturing overhead costs $ 4,650,0000Actual direct labor-hours 212,000
1. Compute the budgeted manufacturing overhead rate.
2. Prepare the summary journal entry to record the allocation of manufacturing overhead.
3. Compute the amount of under- or over allocated manufacturing overhead. Is the amount significant enough to warrant proration of overhead costs, or would it be permissible to write it off to cost of goods sold? Prepare the journal entry to dispose of the under- or over allocation overhead.