Problem - Regal Company produces hospital uniforms. The company allocates manufacturing overhead based on the machine hours each job uses. Regal reports the following cost data for 2009:
Budget Actual
Machine hours 7,000 hours 6,500 hours
Indirect materials 50,000 52,000
Depreciation on trucks used to deliver uniforms to customers 14,000 12,000
Depreciation on plant and equipment 65,000 67,000
Indirect manufacturing labor 40,000 43,000
Customer service hotline 19,000 21,000
Plant utilities 27,000 20,000
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. How can managers use accounting information to help control manufacturing overhead costs?