Accounting for manufacturing overheadPrestige Woods manufactures jewelry boxes. The primary materials (wood, brass, and glass) and direct labor are assigned directly to the products. Manufacturing overhead costs are allocated based on machine hours. Data for 2018 follow:RequirementsCompute the predetermined overhead allocation rate. Round to two decimal places.Post actual and allocated manufacturing overhead to the Manufacturing Overhead T-account.Prepare the journal entry to adjust for underallocated or overallocated overhead.The predetermined overhead allocation rate usually turns out to be inaccurate. Why don’t accountants just use the actual manufacturing overhead rate? EstimatedActual27,000 hoursMachine hoursMaintenance labor (repairs to equipment)Plant supervisor's salaryScrews, nails, and gluePlant utilities32,100 hours$ 17,000$ 23,50048,00050,00028,00045,00044,00092,85049,500Freight outDepreciation on plant and equipmentAdvertising expense37,00085,40083,00046,00053,000

1. Calculation of Total estimated overhead costs : Particulars Amount Maintenance labor $17,000…

Answered: Estimated Actual 27,000 hours Machine…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Accounting for manufacturing overhead

Prestige Woods manufactures jewelry boxes. The primary materials (wood, brass, and glass) and direct labor are assigned directly to the products. Manufacturing overhead costs are allocated based on machine hours. Data for 2018 follow:

Requirements

Compute the predetermined overhead allocation rate. Round to two decimal places.
Post actual and allocated manufacturing overhead to the Manufacturing Overhead T-account.
Prepare the journal entry to adjust for underallocated or overallocated overhead.
The predetermined overhead allocation rate usually turns out to be inaccurate. Why don’t accountants just use the actual manufacturing overhead rate?

Estimated
Actual
27,000 hours
Machine hours
Maintenance labor (repairs to equipment)
Plant supervisor's salary
Screws, nails, and glue
Plant utilities
32,100 hours
$ 17,000
$ 23,500
48,000
50,000
28,000
45,000
44,000
92,850
49,500
Freight out
Depreciation on plant and equipment
Advertising expense
37,000
85,400
83,000
46,000
53,000

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