Solutions to Exercises
Question 3.13
(15 min)
Accounting for manufacturing overhead.
1.
Budgeted manufacturing overhead rate
€7,000,000 ÷ 200,000 = €35 per machine-hour
2.
Work in progress control
€6,825,000
Manufacturing overhead allocated
(195,000 machine-hours ÷ €35 = €6,825,000)
€6,825,000
3.
€6,825,000 − €6,800,000
= €25,000 overallocated, an insignificant amount
Manufacturing overhead allocated
€6,825,000
Manufacturing department overhead
control
€6,800,000
Cost of goods sold
€25,000
Question 3.14 Proration of Overhead (20 minutes)
1.
Budgeted manufacturing overhead rate is €4,800,000 ÷ 80,000 = €60 per machine-
hour.
2.
Manufacturing overhead underallocated = manufacturing overhead incurred
−
manufacturing overhead allocated
