The following data pertain to the Oneida Restaurant Supply Company for the year

Question

The following data pertain to the Oneida Restaurant Supply Company for the year just ended. Budgeted sales revenue $205,000 Actual manufacturing overhead 336,000 Budgeted machine hours (based on practical capacity) 8,000 Budgeted direct-labor hours (based on practical capacity) 20,000 Budgeted direct-labor rate $13 Budgeted manufacturing overhead $364,000 Actual machine hours 11,000 Actual direct-labor hours 18,000 Actual direct-labor rate $17 Required: Prepare a journal entry to add to work-in-process inventory the total manufacturing overhead cost for the year, assuming 1. The firm uses actual costing. 2. The firm uses normal costing, with a predetermined overhead rate based on machine hours.

Explanation / Answer

Journal Entries: Accounts title and explanations Debit $ Credit $ CASE-1: Based on Actual Costing: Work in process Inventory Dr. 336,000     Manufacturing Overheads 336,000 CASE-2: Based on OH rate: Work in process Inventory Dr. 500,500     Manufacturing Overheads 500,500 Note: Pre-determined OH rate based on Machine Hours: Budgeted Manufacturing OH 364,000 Budgeted machine Hours 8,000 OH rate per MH 45.5 Actual machine Hours 11,000 MH OH applied (11000*45.50) 500500

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