December 2016, Custom Mfg. established its predetermined overhead rate for jobs

Question

December 2016, Custom Mfg. established its predetermined overhead rate for jobs produced during ost predictions: overhead costs, $520,000, and direct materials costs, $400.000. ctual overheed costs for the year are $649100. Actual direct material cost had been assigned to jobs as follows. 2017 by using the following At year-end 2017, the company's records show th obs completed and sold Jobs in finished goods inventory72,ee Jobs in work in process inventory Total actual direct materials cost $378,8e6 56,898 $492,090 1. Determine the predetermined overhead rate for 2017. 283. Enter the overhead costs incurred and the amounts applied during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied 4. Prepare the adjusting entry to allocate any over-or underapplied overhead to Cost of Goods Sold Complete this question by entering your answers in the tabs below. Req 1 2 and 3Raq 4 Determine the predetermined overhead rate for 2017. C Req Req 2 and 3> 0

Explanation / Answer

Req 1; Pre-determined OH rate: Estimated OH/ Direct Material cost *100 450,000 /300,000 *100 = 150% of direct material cost Formula Estimated Overheads      / Estimated Direct material cost   = OH rate 450,000        / 300,000         = 150% of direct material cost Req 2&3 Under/Over-applied Overheads: 818200 Actual Overheads applied Overheads Applied 540,000 * 150% 810000 UNDER-APPLIED OVERHEADS 8200 Req 4: Cost of Goods sold Dr. 8200        Manufacturing Overheads 8200

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