Question

1. Zella Co. uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Zella allocates manufacturing overhead costs using direct manufacturing labor costs. Zella provides the following information:

	Budget for 2018	Actual Results for 2018
Direct material costs	$2,000,000	$1,900,000
Direct manufacturing labor hours	1,500	1,480
Manufacturing overhead costs	2,900,000	2,950,000

1. Compute the actual and budgeted manufacturing overhead rates for 2018. (1pt)
2. At the end of 2018, compute the under- or overallocated manufacturing overhead under normal costing. Prepare a journal entry to dispose of this amount. (1pt)

solve it in Microsoft word please

Answer 1

A)
Computation the actual and budgeted manufacturing overhead rates for 2018.
			Budgeted	Actual
Manufacturing overhead costs	$ 29,00,000.00	$ 29,50,000.00
Direct manufacturing labor hours	1,500	1,480
manufacturing overhead rates	$      1,933.33	$      1,993.24
B)
computation of under- or overallocated manufacturing overhead under normal costing.
As per budget the allocation of Overhead will be 1933.33 per hour
So for 1480 hours the allocation will be = 1933.33 * 1480=	$         28,61,333.33
But actual over head		$         29,50,000.00
under Allocated		$    88,666.67
Journal entry
Cost of Goods sold		$               88,666.67
To Manufacturing Overhead	$               88,666.67