Problem 15-4A Overhead allocation and adjustment using a predetermined overhead rate LO P3, P4

At the beginning of the year, Learer Companys manager estimated total direct labor cost assuming 40 persons working an average of 2,500 hours each at an average wage rate of $20 per hour. The manager also estimated the following manufacturing overhead costs for the year.

Indirect labor	$	320,200
Factory supervision		111,000
Rent on factory building		141,000
Factory utilities		89,000
Factory insurance expired		69,000
DepreciationFactory equipment		402,000
Repairs expenseFactory equipment		61,000
Factory supplies used		69,800
Miscellaneous production costs		37,000
Total estimated overhead costs	$	1,300,000

At year-end, records show the company incurred $1,665,000 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $605,000; Job 202, $564,000; Job 203, $299,000; Job 204, $717,000; and Job 205, $315,000. In addition, Job 206 is in process at the end of the year and had been charged $18,000 for direct labor. No jobs were in process at the beginning of the year. The companys predetermined overhead rate is based on direct labor cost. Required 1-a. Determine the predetermined overhead rate for the year. 1-b. Determine the total overhead cost applied to each of the six jobs during the year. 1-c. Determine the over- or underapplied overhead at the year-end. 2. Assuming that any over- or underapplied overhead is not material, prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold at the end of the year.

Problem 15-4A Overhead allocation and adjustment using a predetermined overhead rate LO P3, P4

At the beginning of the year, Learer Companys manager estimated total direct labor cost assuming 40 persons working an average of 2,500 hours each at an average wage rate of $20 per hour. The manager also estimated the following manufacturing overhead costs for the year.

Indirect labor	$	320,200
Factory supervision		111,000
Rent on factory building		141,000
Factory utilities		89,000
Factory insurance expired		69,000
DepreciationFactory equipment		402,000
Repairs expenseFactory equipment		61,000
Factory supplies used		69,800
Miscellaneous production costs		37,000
Total estimated overhead costs	$	1,300,000

At year-end, records show the company incurred $1,665,000 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $605,000; Job 202, $564,000; Job 203, $299,000; Job 204, $717,000; and Job 205, $315,000. In addition, Job 206 is in process at the end of the year and had been charged $18,000 for direct labor. No jobs were in process at the beginning of the year. The companys predetermined overhead rate is based on direct labor cost. Required 1-a. Determine the predetermined overhead rate for the year. 1-b. Determine the total overhead cost applied to each of the six jobs during the year. 1-c. Determine the over- or underapplied overhead at the year-end. 2. Assuming that any over- or underapplied overhead is not material, prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold at the end of the year.

Req 1A Req 1B Req 1C Req 2 Determine the predetermined overhead rate for the year. Predetermined overhead rate Choose Numerator: 1 Choose Denominator: = Predetermined overhead rate 1 = Predetermined overhead rate = 0 Req 1A Req 1B > Req 1A Req 1B Req 1C Req 2 Determine the total overhead cost applied to each of the six jobs during the year. Job No. Direct Labor Overhead cost applied 201 $ 605,000 202 564,000 203 299,000 204 717,000 205 206 315,000 18,000 $ 2,518,000 $ Total 0 Req 1A Reg 1B Req 1C Req 2 Determine the over- or underapplied overhead at the year-end. Factory Overhead 0 Journal entry worksheet