1.

The firm's predetermined overhead rate for the year

a. Machine hours
Budgeted manufacturing overhead cost 364000
Budgeted amount of cost driver 10000
Predetermined rate 36.4
Predetermined rate is $36.4/machine hour.
b. Direct-labor hours
Budgeted manufacturing overhead cost 364000
Budgeted amount of cost driver 20000
Predetermined rate 18.2
Predeterminded rate is $18.2/labor hour.
c. Direct-labor dollars
Budgeted manufacturing overhead cost 364000
Budgeted amount of cost driver 280000
Predetermined rate 1.3
Predeterminded rate is $1.3/labor dollar.
Budgeted labor dollars = Budgeted direct labor hours x Budgeted direct labor rate
280000
 2
a. Machine hours
Predeterminded rate 36.4
Actual activity 11000
Manufacturing overhead applied 400400

Actual manufacturing overhead 340000

Manufacturing overhead applied 400400
Overapplied -60400

b. Direct-labor hours c. Direct-labor dollars

Predeterminded rate 18.2 Predeterminded rate 1.3
Actual activity 18000 Actual activity 270000
Manufacturing overhead applied 327600 Manufacturing overhead applied 351000

Actual manufacturing overhead 340000 Actual manufacturing overhead 340000

Manufacturing overhead applied 327600 Manufacturing overhead applied 351000
Underapplied 12400 Overapplied -11000
1. The firm’s predetermined overhead rate is
a. Direct-labor hours
Budgeted manufacturing overhead cost $997,500
Budgeted direct-labor cost 75,000
Predetermined rate 13.3
Predeterminded rate is $13.3/labor hour.
2. Overapplied or underapplied overhead for the year.
Actual manufacturing overhead
Depreciation 231,000
Property taxes 21,000
Indirect labor 82,000
Supervisory salaries 200,000
Utilities 59,000
Insurance 30,000
Rental of space 300,000
Indirect material
Beginning inventory, January 1 48,000
Add: Purchases during the year 94,000
Subtract: Ending inventory, December 31 63,000
Total indirect material 79,000
Actual manufacturing overhead 1,002,000
 3. Journal entry to close out the
Manufacturing Overhead account
Predeterminded rate 13.3 No
Actual activity 80,000 1
Manufacturing overhead applied 1,064,000
2
Actual manufacturing overhead 1,002,000
Manufacturing overhead applied 1,064,000
Overapplied -62000
Accounts Title Debit Credit
Manufacturing overhead 1,002,000
WIP inventory 1,002,000
Manufacturing overhead 62,000
COGS 62,000
4. Budgeted manufacturing overhead was $990,000, property taxes were $25,000,
and purchases of indirect material amounted to $97,000.
1. The firm’s predetermined overhead rate is
a. Direct-labor hours
Budgeted manufacturing overhead cost $990,000
Budgeted direct-labor cost 75,000
Predetermined rate $13.20
2. Overapplied or underapplied overhead for the year.
Actual manufacturing overhead
Depreciation 231,000
Property taxes 25,000
Indirect labor 82,000
Supervisory salaries 200,000
Utilities 59,000
Insurance 30,000
Rental of space 300,000
Indirect material
Beginning inventory, January 1 48,000
Add: Purchases during the year 97,000
Subtract: Ending inventory, December 31 63,000
Total indirect material 82,000
Actual manufacturing overhead 1,009,000
Predeterminded rate 13.3
Actual activity 80,000
Manufacturing overhead applied 1,064,000

Actual manufacturing overhead 1,009,000

Manufacturing overhead applied 1,064,000
Overapplied -55000
Predetermined cost to be charged with WIP
Square feet of leather used 100 Machine hours 3
Predetermined rate 3 Predetermined rate 9
Tanning department 300 Assembly department 27

20 saddle sets 6000 20 saddle sets 540

 No
Direct-labor hours 40 1
Predetermined rate 4
Saddle department 160 2

20 saddle sets 3200 3

Accounts title Debit Credit
WIP inventory 6000
Manufacturing overhead (tanning department) 6000
WIP inventory 540
Manufacturing overhead (assembly department) 540
WIP inventory 3200
Manufacturing overhead (saddle department) 3200
1. Company’s predetermined overhead application rate
Budgeted manufacturing overhead cost 840,000
Budgeted amount of cost driver 16,000
Predetermined rate 52.5
2. Journal entries as of March 31
a. The issuance of direct material to production and the direct labor incurred.
Accounts title Debit Credit
WIP inventory (4 jobs cộng lại) $80,000
Raw material inventory $80,000
WIP inventory DL (4 jobs cộng lại) $130,800
Wages payable $130,800
b. The manufacturing overhead incurred during the quarter.
Manufacturing overhead $238,500
Depreciation $34,000
Indirect labor $60,000
Indirect materials used $5,000
Other factory costs $139,500
c. The application of manufacturing overhead to production.
WIP = (1200+700+2000+500)*52.5 $231,000
Manufacturing overhead $231,000
d. The completion of jobs no. 64 and no. 65.
Finished goods inventory = 21000 +35000+1200*52.5+84000 $203,000
WIP inventory $203,000
Finished goods inventory = 22000 + 700*52.5+53500 $112,250
WIP inventory $112,250
e. The sale of job no. 65.
Accounts receivable $146,950
Sales revenue $146,950
COGS $112,250
Finished goods inventory $112,250
3. The cost of the jobs still in production as of March 31.
Job number Direct material Direct labor Manufacturing overhead
66 44000 65000 105000
67 15000 8800 26250
4. Finished-goods inventory
Details Amount
Beginning WIP 84000
Direct material 21000
Direct labor 35000
Manufacturing overhead 63000
Increased finished goods 203000
5. Manufacturing overhead under- or overapplied
Details Amount
Actual manufacturing overhead 238500
Applied manufacturing overhead 231000
Underapplied 7500

e. DR COGS Job 65
CR FGS Job 65
Total cost
214000
50050