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In: Accounting

Puget Sound Manufacturing uses normal costing and allocates manufacturing overhead to jobs based on a budgeted...

Puget Sound Manufacturing uses normal costing and allocates manufacturing overhead to jobs based on a budgeted direct labor-hour rate for the actual direct labor hours. Any overallocated or underallocated overhead is written-off to the cost of goods sold at the end of the month. During April 2019, Puget Sound Manufacturing recorded the following:

Budgeted manufacturing overhead costs:

$400,000

Budgeted direct labor-hours:

20,000 DLHRS

Budgeted machine hours:

16,000 MHRS

Actual manufacturing overhead costs:

$360,000

Actual direct labor-hours:  

22,500 DLHRS

Actual machine hours:

15,000 MHRS

Jobs #22, #23, and #24 were started and completed in April. There were no jobs in process at the beginning or end of April. Actual costs and resources used by each job are listed below:

Job #22

Job #23

Job #24

Direct Materials Used

$40,000

$25,000

$30,000

Direct Labor Hours

9,000

6,000

7,500

Direct Labor Wage Rate

$15/hour

$15/hour

$15/hour

Machine Hours

6,000

4,000

5,000

Please answer each of the 4 parts (A-D). Clearly indicate your answer for each part. You must show all your work and calculations for each part in order to receive full credit. If you choose to type your work directly in Canvas, do so in this text box for Parts A-D. If you choose to upload your handwritten work, you will have the opportunity to upload your work for all problems with a file upload link located at the end of Problem 3. Please note that you must still type your final answer for Problem 1 Parts A-D in this text box. Do not forget to show your units!

A. Calculate the predetermined overhead rate used for allocating manufacturing overhead?

B. Calculate the amount of manufacturing overhead allocated to Job #24 during the month of April?

C. Calculate Puget Sound Manufacturing’s cost of goods manufactured (CGM) for April 2019?

D. What is the accounting adjusting entry to close out the overallocated or underallocated manufacturing overhead on April 30?

Solutions

Expert Solution

A)Predetermined overhead rate =Estimated overhead /estimated Direct labor hours

                     = 400000 / 20000

                    = $ 20 per DLH

B)Amount of manufacturing overhead allocated to Job 24 = Actual direct labor hours * Predetermined overhead rate

                                                                   = 7500 * 20

                                                                   = 150000

C)Cost of goods manufactured = 882500

Job 22 Job 23 Job 24 Total
Direct material 40000 25000 30000 95000
Direct labor 9000*15=135000 6000*15= 90000 7500*15=112500 337500
overhead applied 9000*20=180000 6000*20=120000 7500*20=150000 450000
Total 355000 235000 292500 882500

D)

Actual manufacturing overhead 360000
less:Overhead applied (450000)
Underapplied /(overapplied overhead ) (90000)overapplied
Date Account title Debit credit
Apr 30 Mnaufacturing overhead 90000
cost of goods sold 90000

ekkarill92 answered 1 year ago
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