Machine-hours 61,000Manufacturing overhead cost $ 1,324,000Inventories at year-end:Raw materials $ 16,000Work in process (includes overhead applied of $115,900) $ 188,000Finished goods (includes overhead applied of $208,620) $ 338,400Cost of goods sold (includes overhead applied of $834,480) $ 1,353,600The predetermined overhead rate was based on a cost formula that estimates $1,368,000 of total manufacturing overhead for an estimated activity level of 72,000 machine-hours.Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry.What is the journal entry amount?I have the entries ( COGS & Finished Goods).

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Asked Feb 1, 2019
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Machine-hours 61,000
Manufacturing overhead cost $ 1,324,000
Inventories at year-end:
Raw materials $ 16,000
Work in process (includes overhead applied of $115,900) $ 188,000
Finished goods (includes overhead applied of $208,620) $ 338,400
Cost of goods sold (includes overhead applied of $834,480) $ 1,353,600

The predetermined overhead rate was based on a cost formula that estimates $1,368,000 of total manufacturing overhead for an estimated activity level of 72,000 machine-hours.

Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry.

What is the journal entry amount?

I have the entries ( COGS & Finished Goods).

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Expert Answer

Step 1

First step is to compute the Pre-determined OH rate as above

Then the Overheads applied to production is computed on the bassis of Machine hours and Oh rate as computed above.

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Step 2

Then next step is to compute the Under/Over-applied OH. The overheads in this case is under-applied as the overheads inccurred is more than applied. As computed above.

After that, the Allocation of Under-applied Oh is made on the basis of proportion of overheads applied on various accounts (i.e. work in process, finished goods and cost of goods sold).

This is done as computed above.

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Step 3

Journal entry for the under-applied overheads is that it will increase the balance of various accounts as...

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