In December 2010, Gomez Company's manager estimated next year's total direct labor cost assuming 50 persons working an average of 2,050 hours each at an average wage rate of $15 per hour. The manager also estimated the following manufacturing overhead costs for year 2011.
|
|
|
|
| Indirect labor |
$ |
173,825 |
|
| Factory supervision |
|
129,000 |
|
| Rent on factory building |
|
79,000 |
|
| Factory utilities |
|
44,900 |
|
| Factory insurance expired |
|
35,100 |
|
| Depreciation-Factory equipment |
|
243,000 |
|
| Repairs expense-Factory equipment |
|
31,500 |
|
| Factory supplies used |
|
34,800 |
|
| Miscellaneous production costs |
|
13,000 |
|
|
|
|
|
| Total estimated overhead costs |
$ |
784,125 |
|
|
|
|
|
|
|
At the end of 2011, records show the company incurred $747,482 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $347,000; Job 202, $338,000; Job 203, $177,000; Job 204, $426,000; and Job 205, $189,000. In addition, Job 206 is in process at the end of 2011 and had been charged $11,200 for direct labor. No jobs were in process at the end of 2010. The company's predetermined overhead rate is based on direct labor cost.
|
| Required |
| 1a. |
Determine the predetermined overhead rate for year 2011. (Omit the "%" sign in your response.)
|
| Predetermined overhead rate |
% |
| 1b. |
Determine the total overhead cost applied to each of the six jobs during year 2011. (Omit the "$" sign in your response.)
|
| Job No. |
Applied Overhead |
| 201 |
$ |
| 202 |
|
| 203 |
|
| 204 |
|
| 205 |
|
| 206 |
|
|
|
| Total |
$ |
|
|
|
| 1c. |
Determine the over- or underapplied overhead at year-end 2011. (Input all amounts as positive values. Omit the "$" sign in your response.)
|
| 2. |
Assuming that any over- or underapplied overhead is not material, prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold at the end of year 2011. (Omit the "$" sign in your response.)
|
| Date |
General Journal |
Debit |
Credit |
| Dec. 31 |
Factory overhead |
|
|
|
Cost of goods sold |
|
|
|
Explanation:
| 1a. |
|
Predetermined overhead rate
|
| Estimated overhead costs |
|
$784,125 |
|
$784,125 |
|
|
|
= |
|
= |
|
= |
51% |
| Estimated direct labor cost |
|
[50 × 2,050 × $15] |
|
$1,537,500 |
|
|
| 1b. |
| Overhead costs charged to jobs |
| Job No. |
Direct Labor |
|
Applied
Overhead(51%) |
|
| 201 |
$ |
347,000 |
|
$ |
176,970 |
|
|
| 202 |
|
338,000 |
|
|
172,380 |
|
|
| 203 |
|
177,000 |
|
|
90,270 |
|
|
| 204 |
|
426,000 |
|
|
217,260 |
|
|
| 205 |
|
189,000 |
|
|
96,390 |
|
|
| 206 |
|
11,200 |
|
|
5,712 |
|
|
|
|
|
|
|
|
|
|
| Total |
$ |
1,488,200 |
|
$ |
758,982 |
|
|
|
|
|
|
|
|
|
|
|
| 1c. & 2. |
| Overapplied or underapplied overhead determination |
|
|
|
|
|
| Actual overhead cost |
$ |
747,482 |
|
|
| Less: Applied overhead cost |
|
758,982 |
|
|
|
|
|
|
|
| Overapplied overhead |
$ |
11,500 |
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