Question

In: Accounting

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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