ACCTG 225 Hewitt Fall 2005 - 1 - Solution to Midterm 1 Part (i)PREDETERMINED = Estimated Manufacturing OverheadOVERHEAD RATE Estimated Cost Driver = $4,500___1,200 units = $3.75 per unitThe $4,500 estimated manufacturing overhead balance comprises of the following amounts: Factory maintenance Factory supplies Factory insurance Factory utilities Factory lubrication Indirect labor $600 750 802 888 560 900 Total $4,500 Of the costs in the table presented in the question, sales commissions and advertising (totaling $2,000) are both excluded since they represent period costs and not indirect product costs. Part (ii)APPLIED MAN. = Predetermined overhead rate xActual cost driver OVERHEAD level= $3.75 per unit x 1,050 units = $3,937.50Journal entry to record applied manufacturing overhead to WIP: DR Work in process 3,937.50 CR Manufacturing overhead 3,937.50
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