For Eckstein Company, the predetermined overhead rate is 121% of direct labor co
ID: 2471686 • Letter: F
Question
For Eckstein Company, the predetermined overhead rate is 121% of direct labor cost. During the month, Eckstein incurred $100,000 of factory labor costs, of which $80,500 is direct labor and $19,500 is indirect labor. Actual overhead incurred was $102,405.
Compute the amount of manufacturing overhead applied during the month and determine the amount of under- or overapplied manufacturing overhead.
During the year, manufacturing overhead costs were $242,000. Machine usage was 2,600 hours. The company assigns overhead based on machine hours. Job No. 551 used 90 machine hours.
Compute the predetermined overhead rate and determine the amount of overhead to allocate to Job No. 551.
Prepare the entry to assign overhead to Job No. 551 on January 15.
Explanation / Answer
Compute the amount of manufacturing overhead applied during the month is $102,405, predetermine overhead is $100,000 ($80,500 and $19,500) it is over applied manufacturing overhead is $2,405.
Compute the predetermined overhead and amount of overhead to allocate to Job. 551:
Predetermined overhead:
Details
Amount
Manufacturing overhead
$ 242,000
Machine hours
2,600
cost per Machine hour
$ 93.08
Total amount of overhead for the job no 551:
Details
Amount
cost per Machine hour
$ 93.08
Number of machine hours
90
Total cost
$ 8,377.20
Prepare the Journal entry:
Date
Account title & explanation
Debit
Credit
Manufacturing overhead
$ 8,377
Job cost
$ 8,377
Details
Amount
Manufacturing overhead
$ 242,000
Machine hours
2,600
cost per Machine hour
$ 93.08
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