Sloan Woods manufactures jewelry boxes. The primary materials (wood, brass, and glass) and direct labor are assigned directly to the products. Manufacturing
overhead costs are allocated based on machine hours. Data for the year follow:
(Click the icon to view the cost data.)
Requirement 1. Compute the predetermined overhead allocation rate. Round to two decimal places.
Predetermined overhead
allocation rate
per machine hour
Requirements
1. Compute the predetermined overhead allocation rate. Round to two decimal
places.
2. Post actual and allocated manufacturing overhead to the Manufacturing
Overhead T-account.
3. Prepare the journal entry to adjust for underallocated or overallocated
overhead.
4. The predetermined overhead allocation rate usually turns out to be inaccurate.
Why don't accountants just use the actual manufacturing overhead rate?
Data table
Estimated
Actual
Machine hours
30,000 hours
32,800 hours
Maintenance labor (repairs to equipment)
$
13,000 $
29,500
Plant supervisor's salary
44,000
48,000
Screws, nails, and glue
24,000
43,000
Plant utilities
49,000
97,850
Freight out
38,000
47,500
Depreciation on plant and equipment
93,100
89,000
Advertising expense
44,000
55,000