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Estimated Actual 32,200 hours $ 27,500 Machine hours 24,500 hours Maintenance labor (repairs to equipment) $ 19,000 Plant supervisor's salary 41,000 46,000 Screws, nails, and glue 21,000 41,000 Plant utilities 42,000 97,850 Freight out 39,000 44,500 Depreciation on plant and equipment 83,800 82,000 Advertising expense 46,000 60,000

Estimated Actual 32,200 hours $ 27,500 Machine hours 24,500 hours Maintenance labor (repairs to equipment) $ 19,000 Plant supervisor's salary 41,000 46,000 Screws, nails, and glue 21,000 41,000 Plant utilities 42,000 97,850 Freight out 39,000 44,500 Depreciation on plant and equipment 83,800 82,000 Advertising expense 46,000 60,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Accounting for manufacturing overhead

Elegant 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

  1. Compute the predetermined overhead allocation rate. Round to two decimal places.
  2. Post actual and allocated manufacturing overhead to the Manufacturing Overhead T-account.
  3. Prepare the journal entry to adjust for underallocated or overallocated overhead.
  4. The predetermined overhead allocation rate usually turns out to be inaccurate. Why don’t accountants just use the actual manufacturing overhead rate?
Estimated Actual 32,200 hours $ 27,500 Machine hours 24,500 hours Maintenance labor (repairs to equipment) $ 19,000 Plant supervisor's salary 41,000 46,000 Screws, nails, and glue 21,000 41,000 Plant utilities 42,000 97,850 Freight out 39,000 44,500 Depreciation on plant and equipment 83,800 82,000 Advertising expense 46,000 60,000
Transcribed Image Text:Estimated Actual 32,200 hours $ 27,500 Machine hours 24,500 hours Maintenance labor (repairs to equipment) $ 19,000 Plant supervisor's salary 41,000 46,000 Screws, nails, and glue 21,000 41,000 Plant utilities 42,000 97,850 Freight out 39,000 44,500 Depreciation on plant and equipment 83,800 82,000 Advertising expense 46,000 60,000
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