White Woods manufactures jewelry boxes. The primary materials (wood,
brass, and glass) and direct labor are traced directly to the products.
Manufacturing overhead costs are allocated based on machine hours. Data
for 2012 follow:
Estimated (Budget) Actual
Machine hours 25,000 hours 32,100 hours
Maintenance labor (repairs to equipment) $12,000 $28,500
Plant supervisor's salary 47,000 48,000
Screws, nails, and glue 24,000 45,000
Plant utilities 41,000 96,850
Freight out 37,000 46,500
Depreciation on plant and equipment 87,000 83,000
Advertising expense 43,000 54,000
Requirements
1. Compute the predetermined manufacturing overhead rate.
2. Post actual and allocated manufacturing overhead to the Manufacturing overhead T-account.
3. Close the under- or overallocated overhead to Cost of goods sold.
4. The predetermined manufacturing overhead rate usually turns out to
be inaccurate. Why don’t accountants just use the actual manufacturing
overhead rate?
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