Problem 19-4A Overhead allocation and adjustment using a predetermined overhead rate LO P3, P4

In December 2016, Learer Companys manager estimated next years total direct labor cost assuming 40 persons working an average of 3,000 hours each at an average wage rate of $20 per hour. The manager also estimated the following manufacturing overhead costs for 2017.

Indirect labor	$321,200
Factory supervision	156,000
Rent on factory building	142,000
Factory utilities	90,000
Factory insurance expired	70,000
DepreciationFactory equipment	490,000
Repairs expenseFactory equipment	62,000
Factory supplies used	70,800
Miscellaneous production costs	38,000
Total estimated overhead costs	$1,440,000

At the end of 2017, records show the company incurred $1,542,000 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $606,000; Job 202, $565,000; Job 203, $300,000; Job 204, $718,000; and Job 205, $316,000. In addition, Job 206 is in process at the end of 2017 and had been charged $19,000 for direct labor. No jobs were in process at the end of 2016. The companys predetermined overhead rate is based on direct labor cost. Required 1-a. Determine the predetermined overhead rate for 2017. 1-b. Determine the total overhead cost applied to each of the six jobs during 2017. 1-c. Determine the over- or underapplied overhead at year-end 2017. 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 2017.

Req 1B Req 1A Req 1C Req 2 Determine the predetermined overhead rate for 2017. Predetermined overhead rate Choose Numerator: Choose Denominator Predetermine overhead rate = | Predetermine overhead rate Req 1A Req 1B Req 1C Req 2 Determine the total overhead cost applied to each of the six jobs during 2017. Job No. 201 202 203 204 205 206 Total Direct Labor Overhead cost applied $606,000 565,000 300,000 718,000 316,000 19,000 $ 2,524,000 K Req 1A Req 1C > Req 1A Req 1B Req 1C Req 2 Determine the over- or underapplied overhead at year-end 2017. Factory Overhead K Req 1B Req 2 Req 1A Req 1C Req 1B Req 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 2017. View transaction list Journal entry worksheet Record the entry to allocate any overapplied or underapplied overhead to Cost of Goods Sold at the end of year 2017. Note: Enter debits before credits. Debit Credit Date General Journal Dec 31