Exercise 20-13 SHOW LIST OF ACCOUNTS Account Titles and Explanation Debit Credit
ID: 2480894 • Letter: E
Question
Exercise 20-13
SHOW LIST OF ACCOUNTS
Account Titles and Explanation
Debit
Credit
SHOW LIST OF ACCOUNTS
Exercise 20-13
Tombert Decorating uses a job order cost system to collect the costs of its interior decorating business. Each client’s consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below are data for the current year.Estimated overhead $960,000 Actual overhead $982,800 Estimated decorator hours 40,000 Actual decorator hours 40,500
The company uses Operating Overhead in place of Manufacturing Overhead.
Explanation / Answer
Solution:
a).Pre-determined overhead rate= Estimated overhead cost/ estimated totalunits in the allocation base
=9,60,000/40,000
=$24 per decoration hour
b).Journal entry for recording it:
Work in process 9,72,000 ( 24*40,500)
Operating overhaed A/c 9,72,000
c).The overhead is under applied by $ 10,800 ( 9,82,800-9,72,000)
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