Jamison Woodworking uses normal costing and allocates manufacturing overhead to jobs based on a budgeted labor-hour rate and actual direct labor-hours. Under-or overallocated overhead, if immaterial, is written off to Cost of Goods Sold. During 2014, Jamison recorded the following:
Budgeted manufacturing overhead costs ...... $ 4,400,000
Budgeted direct labor-hours ........... 200,000
Actual manufacturing overhead costs ........ $ 4,650,000
Actual direct labor-hours ............. 212,000

1. Compute the budgeted manufacturing overhead rate.
2. Prepare the summary journal entry to record the allocation of manufacturing overhead.
3. Compute the amount of under-or overallocated manufacturing overhead. Is the amount significant enough to warrant proration of overhead costs, or would it be permissible to write it off to cost of goods sold? Prepare the journal entry to dispose of the under-or overallocated overhead.

  • CreatedMay 14, 2014
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