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Question
senet can contin vituses Unleia you meed to edt, it's tafer to stay in Protected View. Enble E Chapter 2: Allocation of Overhead, Journal Entries Example Recording Inventory Costs Vulcan Molding produces molded rubber components. At the start of the year, the company estimated that it would incur $3,500,000 of direct labor cost and $9,000,000 of manufacturing overhead. Overhead is allocated to production on the basis of direct labor cost. Actual materials used during the year were $5,750,000, actual direct labor cost was $4,000,000, and actual overhead was $11,000,000. Required a. Calculate the overhead rate for the current year. Round to 2 decimal places. b. Prepare the journal entry to record use of direct material. c. Prepare the journal entry to record direct labor d. Prepare the journal entry to record manufacturing overhead applied to production e. Prepare the journal entry to close the balance in manufacturing overhead to cost of goods sold.Explanation / Answer
(a) Estimated manufacturing overhead = $9,000,000
Estimated direct labor cost = $3,500,000
Overhead rate = Estimated manufacturing overhead/Estimated direct labor cost
= 9,000,000/3,500,000
= 257.14%
Journal
Actual direct labor cost = $4,000,000
Hence, manufacturing overhead applied = 4,000,000 x 257.14%
= $10,285,600
Actual manufacturing overhead = $11,000,000
Hence, manufacturing overhead under applied = Actual manufacturing overhead - manufacturing overhead applied
= 11,000,000 - 10,285,600
= $714,400
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Date Account Debit Credit (b) Work in process inventory 5,750,000 Raw materials inventory 5,750,000 (c) Work in process inventory 4,000,000 Factory payroll 4,000,000 (d) Work in process inventory 10,285,600 Manufacturing overhead 10,285,600 (e) Cost of goods sold 714,400 Manufacturing overhead 714,400Related Questions
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