During the month of September, Reading Inc. applied overhead to jobs using an ov
ID: 2350623 • Letter: D
Question
During the month of September, Reading Inc. applied overhead to jobs using an overhead rate of $0.80 per dollar of direct labor. Direct labor in August was $65,000. Actual overhead in August was $51,200.Actual overhead was composed of the following items:
Indirect materials $21,200
Indirect labor $6,800
Utilities $1,400
Depreciation $12,500
Repair expense $9,300
Total $51,200
Determine the balance in manufacturing overhead and prepare a journal entry to close the balance to cost of goods sold
My thoughts are that the balance should $13800, I submitted this for review and my teacher is telling me that it is wrong, or my journal entry may be wrong. Does anybody else have a thought on this please.
Explanation / Answer
Difference = $13800. The overhead is overapplied. Journal entry: Manufacturing overhead Dr $13800 Cost of goods sold Cr $13800
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