Happy Clicks Inc. uses a predetermined overhead allocation rate of $4.75 per machine hour. Actual overhead...

Happy Clicks Inc. uses a predetermined overhead allocation rate of $4.75 per machine hour. Actual overhead costs incurred during the year are as follows:

Indirect materials	$5,200
Indirect labor	$3,750
Plant depreciation	$4,800
Plant utilities and insurance	$9,530
Other plant overhead costs	$12,700
Total machine hours used during the year	7,520 hours

What is the amount of manufacturing overhead cost allocated to Work-in-Process Inventory during the year?

Is the manufacturing overhead account under or over allocated and if so by how much?

Journalize the under or over allocation.

Solutions

Expert Solution

Ans 1
Amount of manufacturing overhead cost allocated to Work-in-Process Inventory during the year
7520*4.75
35720

Ans 2
Indirect materials	5200
Indirect labor	3750
Plant depreciation	4800
Plant utilities and insurance	9530
Other plant overhead costs	12700
Actual overhead	35980

Overhead allocated	35720

Under allocated overhead	260



Ans 3

Under applied overhead journal entry
	Debit	Credit
Cost of goods sold	260
Factory overhead		260
( To transfer under applied overheads)

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