In December 2016 Custom Mfg established its predetermined ov

In December 2016, Custom Mfg. established its predetermined overhead rate for jobs produced during 2017 by using the following cost predictions: overhead costs, $1,440,000, and direct materials costs, $600,000. At year-end 2017, the company\'s records show that actual overhead costs for the year are $1,258,900. Actual direct material cost had been assigned to jobs as follows Jobs completed and sold Jobs in finished goods inventory Jobs in work in process inventory Total actual direct materials cost $390,000 78,000 53,000 $521,000 1. Determine the predetermined overhead rate for 2017. 2&3. Enter the overhead costs incurred and the amounts applied during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied 4. Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold Complete this question by entering your answers in the tabs below Req 1 Req 2 and3 Req 4 Determine the predetermined overhead rate for 2017. erhead Rat Choose Numerator: Choose Denominator: Overhead Rate Overhead rate

Solution

1 Estimated overhead costs/Estimated direct materials costs = Overhead rate 1440000/600000= 240% 2 Factory Overhead Actual overhead 1258900 1250400 Applied overhead Underapplied overhead 8500 4 Cost of goods sold 8500      Factory overhead 8500