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5. Manufacturing overhead costs incurred on account were $80,500.
6. Depreciation on the company's office building was $8,100.
7. Manufacturing overhead was applied at the rate of 150% of direct
labor cost.
8. Goods costing $88,000 were completed and transferred to finished
goods.
9. Finished goods costing $75,000 to manufacture were sold on
account for $103,000.
Instructions
Journalize the transactions.
E2-13
Tombert Decorating uses a job order cost system to collect the costs of
its interior decorating business. Each client's consultation is treated as
a separate job. Overhead is applied to each job based on the number of
decorator hours incurred. Listed below are data for the current year.
Estimated overhead $960,000 Actual overhead $982,800 Estimated
decorator hours 40,000 Actual decorator hours 40,500
The company uses Operating Overhead in place of Manufacturing
Overhead.
Instructions
(a) Compute the predetermined overhead rate.
(b) Prepare the entry to apply the overhead for the year.
(c) Determine whether the overhead was under- or over applied and
by how much.