Homework Help is Here – Start Your Trial Now!
Business
Accounting
Exercise 15-26 (Algo) Computing applied overhead and closing over- or underapplied overhead LO P4 At the beginning of the year, Custom Manufacturing set its predetermined overhead rate using the following estimates: overhead costs, $1,040,000, and direct materials costs, $400,000.At year-end, the company reports that actual overhead costs for the year are $1,049,400. 1. Determine the predetermined overhead rate using estimated direct materials costs 2. Enter the actual overhead costs incurred and the amount of overhead cost applied to jobs during the year using the predetermined overhead rate. Determine whether overhead is over- or underapplied (and the amount) for the year. 3. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold.

Exercise 15-26 (Algo) Computing applied overhead and closing over- or underapplied overhead LO P4 At the beginning of the year, Custom Manufacturing set its predetermined overhead rate using the following estimates: overhead costs, $1,040,000, and direct materials costs, $400,000.At year-end, the company reports that actual overhead costs for the year are $1,049,400. 1. Determine the predetermined overhead rate using estimated direct materials costs 2. Enter the actual overhead costs incurred and the amount of overhead cost applied to jobs during the year using the predetermined overhead rate. Determine whether overhead is over- or underapplied (and the amount) for the year. 3. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold.

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter4: Job-order Costing And Overhead Application
Section: Chapter Questions
Problem 62P: (Appendix 4A) Overhead Application, Journal Entries, Job Cost At the beginning of the year, Smith...
See similar textbooks
icon
Related questions
Question
Exercise 15-26 (Algo) Computing applied overhead and closing over- or underapplied overhead LO P4 At the beginning of the year, Custom Manufacturing set its predetermined overhead rate using the following estimates: overhead costs, $1,040,000, and direct materials costs, $400,000.At year-end, the company reports that actual overhead costs for the year are $1,049,400. 1. Determine the predetermined overhead rate using estimated direct materials costs 2. Enter the actual overhead costs incurred and the amount of overhead cost applied to jobs during the year using the predetermined overhead rate. Determine whether overhead is over- or underapplied (and the amount) for the year. 3. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold. No Date General Journal Debit Credit < Required 2 Required 3 >
Transcribed Image Text:Exercise 15-26 (Algo) Computing applied overhead and closing over- or underapplied overhead LO P4 At the beginning of the year, Custom Manufacturing set its predetermined overhead rate using the following estimates: overhead costs, $1,040,000, and direct materials costs, $400,000.At year-end, the company reports that actual overhead costs for the year are $1,049,400. 1. Determine the predetermined overhead rate using estimated direct materials costs 2. Enter the actual overhead costs incurred and the amount of overhead cost applied to jobs during the year using the predetermined overhead rate. Determine whether overhead is over- or underapplied (and the amount) for the year. 3. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold. No Date General Journal Debit Credit < Required 2 Required 3 >
Expert Solution
Introduction :

Using estimated direct material costs ,

Predetermined overhead rate = Estimated manufacturing overhead / Estimated direct material costs

Over-applied / Under-applied factory overhead = Actual overhead cost - Applied overhead cost

If actual overhead > applied overhead , then Under-applied overhead

If applied overhead > actual overhead , then Over-applied overhead 

trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Cost allocation
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Cost Accounting
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
SEE MORE TEXTBOOKS