ElizabethHampton_ACG3341-1_Week4 - Exercise419:, Gammaro...

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Exercise 4-19: Budgeted manufacturing overhead rate, allocated manufacturing overhead Gammaro Company uses normal costing. It allocates manufacuturing overhead costs using a budgeted rate per macine-hour. The data are following for 2011: Budgeted manufacturing overhead costs $4,200,000 Budgeted machine-hours 175,000 Actual manufacturing overhead costs $4,050,000 Actual machine-hours 170,000 Budgeted manufacturing overhead rate, allocated manufacturing overhead. 1 Budgeted manufacturing overhead rate = Budgeted manufacturing overhead Budgeted machine hours $4,200,000 = $24 per machine-hour $175,000 machine hours 2 Manufacturing Actual Budgeted overhead = Machine- x manufacturing allocated hours overhead rate = 170,000 x $24 = $4,080,000 3 Since manufacturing overhead allocated is greater than the actual manufacturing overhead costs, Gammaro overallocated manufacturing overhead: Manufacturing overhead allocated $4,080,000 Actual manufacturing overhead costs 4,050,000 Overallocated manufacturing overhead $30,000
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Exercise 4-23: Accounting for manufacturing overhead Consider the following selected cost date for the Pittsburgh Forging Company for 2011. Budgeted manufacturing overhead costs $7,500,000 Budgeted machine-hours 250,000 Actual manufacturing overhead costs $7,300,000 Actual machine-hours 245,000 The company uses normal costing. Its job-costing system has a single manufacturing overhead cost pool. Cost are allocated to jobs using a budgeted machine-hour rate. Any amout of under-or overallocation is written off to Cost of Goods Sold. 1 Compute the budgeted manufactureing overhead rate Budgeted manufacturing overhead rate = $7,500,000 250,000 machine-hours = $30 per machine-hour 2 Prepare the journal entries to record the allocation of manufacturing overhead. Work-in-Process Control 7,350,000 Manufacturing Overhead Allocated 7,350,000 (245,000 machine-hours × $30 per machine-hour = $7,350,000) 3 Compute the amout of under-or over allocation of manufacturing overhead. Is the amount material? Prepare a journal entry to dispose of this amount.
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