# Brooks Foundry uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs, based on the

## Question:

Brooks Foundry uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs, based on the machine hours required. At the beginning of 2012, the company expected to incur the following:
Manufacturing overhead costs . . . . . . . . $840,000 Direct labor costs . . . . . . . . . . . . . . . . . . 1,550,000 Machine hours . . . . . . . . . . . . . . . . . . 70,000 hours At the end of 2012, the company had actually incurred: Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 1,160,000
Depreciation on manufacturing property,
plant, and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000
Property taxes on plant . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Sales salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,500
Delivery drivers’ wages . . . . . . . . . . . . . . . . . . . . . . . . 23,500
Plant janitor’s wages . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,000
Machine hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,000 hour
Requirements
1. Compute Brooks’ predetermined manufacturing overhead rate.
2. Prepare the journal entry to allocate manufacturing overhead.
3. Post the manufacturing overhead transactions to the Manufacturing overhead T-account. Is manufacturing overhead under-allocated or over-allocated? By how much?
4. Close the Manufacturing overhead account to Cost of goods sold. Does your entry increase or decrease cost of goods sold?

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