Aspen Company estimates its manufacturing overhead to be $64 jobs for the year.

Question

Aspen Company estimates its manufacturing overhead to be $64 jobs for the year. Job 2-1, which was sold during year 2, had actual direct labor costs of $151,064. Job 2-2, which was completed, but not sold at the end of the year, had actual direct labor costs of $380,944. Job 2-3, which is still in work-in-process inventory, had actual direct la $124,792. Actual manufacturing overhead for year 2 was $806,700. Manufacturing overhead is applied on the basis o direct labor costs. 6,250 and its direct labor costs to be $517,000 for year 2. Aspen worked on three 3, which is stil in work-in-process inventory, had actual direct labor costs of Required Prepare an entry to allocate over- or underapplied overhead to Work in Process, Finished Goods and Cost of Goods Sold. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the allocation of over- or underapplied overhead Note: Enter debits before credits ransaction General Journal Debit Credit s inventory inished goods inventory t of good sold

Explanation / Answer

Manufacturing overhead Direct labor hour Pre-determined rate Predetermined overhead rate $        646,250 $        517,000 $                     1.25 Job 2-1 Job 2-2 Job2-3 Total Actual direct labor cost $        151,064 $        380,944 $              124,792 $        656,800 Absorbed manufacturing overhead (direct labor cost*1.25) $        188,830 $        476,180 $              155,990 $        821,000 Actual manufacturing overhead $        806,700 Over applied overhead (divided basis absorbed manufacturing overhead ratio) $            3,289 $            8,294 $                  2,717 $          14,300 Debit Credit Manufacturing overhead A/c $          14,300 Cost of goods sold $            2,717 Fininshed Goods $            8,294 Work in progress $            3,289 (overapplied overhead)

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