Exercise 3–34 Overapplied or Underapplied Overhead The following information pertains to Trenton Glass Works for the year just ended. (on the image below) Required: 1. Compute the firm’s predetermined overhead rate, which is based on direct-labor hours. 2. Calculate the overapplied or underapplied overhead for the year. 3. Prepare a journal entry to close out the Manufacturing Overhead account into Cost of Goods Sold. 4. Build a spreadsheet: Construct an Excel spreadsheet to solve requirements (1) and (2) above. Show how the solution will change if the following data change: budgeted manufacturing overhead was $990,000, property taxes were $25,000, and purchases of indirect material amounted to $97,000.
Exercise 3–34 Overapplied or Underapplied Overhead The following information pertains to Trenton Glass Works for the year just ended. (on the image below) Required: 1. Compute the firm’s predetermined overhead rate, which is based on direct-labor hours. 2. Calculate the overapplied or underapplied overhead for the year. 3. Prepare a journal entry to close out the Manufacturing Overhead account into Cost of Goods Sold. 4. Build a spreadsheet: Construct an Excel spreadsheet to solve requirements (1) and (2) above. Show how the solution will change if the following data change: budgeted manufacturing overhead was $990,000, property taxes were $25,000, and purchases of indirect material amounted to $97,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 3–34 Overapplied or Underapplied
The following information pertains to Trenton Glass Works for the year just ended. (on the image below)
Required:
1. Compute the firm’s predetermined overhead rate, which is based on direct-labor hours.
2. Calculate the overapplied or underapplied overhead for the year.
3. Prepare a
4. Build a spreadsheet: Construct an Excel spreadsheet to solve requirements (1) and (2) above. Show how the solution will change if the following data change: budgeted manufacturing overhead was $990,000, property taxes were $25,000, and purchases of indirect material amounted to $97,000.
Transcribed Image Text:Budgeted direct-labor cost: 75,000 hours (practical capacity) at $16 per hour
Actual direct-labor cost: 80,000 hours at $17.50 per hour
Budgeted manufacturing overhead: $997,500
Actual selling and administrative expenses: 435,000
Actual manufacturing overhead:
Depreciation
$231,000
Property taxes .
Indirect labor .
21,000
82,000
Supervisory salaries
200,000
Utilities
59,000
Insurance
30,000
Rental of space
300,000
Indirect material (see data below)
79,000
Indirect material:
Beginning inventory, January 1
48,000
Purchases during the year
94,000
Ending inventory, December 31
63,000
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