Reference no: EM132701866
Question - Vandelay Industries makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year:
Machine-hours 88,000
Fixed manufacturing overhead cost $1,273,000
Variable manufacturing overhead per machine-hour $3.30
During the year, a glut of furniture on the market resulted in cutting back production and a buildup of furniture in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year:
Machine-hours 60,000
Manufacturing overhead cost $942,000
Inventories at year-end: Raw materials $420,000
Work in process (includes overhead applied of 53,310) $110,000
Finished goods (includes overhead applied of 248,780) $1,050,000
Cost of goods sold (includes overhead applied of 586,410) $2,710,000
Required -
A. Compute the Company's predetermined overhead rate for the year.
B. How much manufacturing overhead was allocated during the current year?
C. Compute the underallocated or overallocated overhead for the year.
D. Record the Journal Entry to close out the underallocated or overallocated manufacturing overhead.