Prepare the journal entry to transfer underapplied

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Problem- Compute predetermined overhead rate and under applied or over applied overhead.

Sullivan Company applied overhead to production using a predetermined overhead rate based on machine-hours. Budgeted data for 2014 are:

Budgeted machine-hours                     75,000

Budgeted manufacturing overhead        $870,000

a. Compute the predetermined overhead rate.

b. Assume that in 2014, actual manufacturing overhead amounted to $997,500, and 86,000 machine-hours were used. Compute the amount of underapplied or overapplied manufacturing overhead for 2014.

c. Prepare the journal entry to transfer underapplied or overapplied overhead to Cost of Goods Sold.

Reference no: EM13847290

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