Luzadis Company makes furniture using the latest automated technology. The compa
ID: 2558844 • Letter: L
Question
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The following estimates were used in preparing the predelermined overhead rate at the beginning of the year Machine-hours Fixed manufacturing overhead cost Variable manufacturing overhead per computer-hour 82,000 $1,270,000 $ 3.10 During the year, a glut of furniture on the market resulted in cutting back production and a buildup of operating data for the year urniture in the oompany's warehouse. The company's cost records revealed the following actual cost and Machine-hours Manufacturing overhead cost 50,000 $985,000 Required 1. Compute the company's predetermined overhead rate for the year. (Round your answer to 2 decimal places) per hour 2. Compute t the underappled or overapplied overhead for the year (Round your intermediate calculations to 2 decimal places) 3. Assume the company oloses any underapplied or overapplied overhead directly to Cost of Goods Soid Prepare the appropriate entry (lf no entry is required for a transactionlevent, select "No journal entry required" in the first account field. Round your intermediate calculations to 2 decimal places)Explanation / Answer
1) Predetermine overhead rate = (1270000/82000)+3.10 = 18.59 per machine hour
2) Over/Under applied overhead = Applied overhead-actual overhead
= (50000*18.59)-985000
Under applied overhead = 55500
3) Journal entry :
date accounts & explanation debit credit Cost of goods sold 55500 Manufacturing overhead 55500 (To close under applied overhead)Related Questions
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