In December 2012, Yerbury Company’s manager estimated next year’s total direct labor cost assuming 50 persons working an average of 2,000 hours each at an average wage rate of $25 per hour. The manager also estimated the following manufactoring overhead costs for year 2013.
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Indirect labor 319200
Factory supervision 240000
Rent on factury building 140000
Factory utilities 88000
Factory insurance expired 68000
Depreciation- Fcatory equipment 480000
Repairs expense-Factory equipment 60000
Factory supplies used 68800
Miscellaneous production costs 36000
Total estimated overhead costs 1500000
At the end of 2013, records show the company incurred $1,520,000 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201,$604,000, Job 202,$563,000, Job 203 $298,000; Job 204, $716,000 and Job 2005, $314,000. In addition, Job 206 is in process at the end of 2013 and had been charged $17,000 for direct labor. No jobs were in process at the end of 2012. The company’s predetermined overhead rate is based on direct labor cost.
Required:
1. Determine the following:
a. Predetermined overhead rate for year 2013
b. Total overhead cost applied to each of the six jobs during year 2013.
c. Over-or underapplied overhead at year-end 2013.
2.Assuming that any over-or underapplied overhead is not material, prepare the adjusting entry to allocate any over-or underapplied overhead to Cost of good sold at the end of year 2013.
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