Accounting for manufacturing overhead. Consider the following selected cost data for the Pittsburgh Forging Company for 2011.
|
Budgeted manufacturing overhead costs |
$7,500,000 |
|
Budgeted machine hours |
250,000 |
|
Actual manufacturing overhead costs |
$7,300,000 |
|
Actual machine hours |
245,000 |
The company uses normal costing. Its job costing system has a single manufacturing overhead cost pool.
Costs are allocated to jobs using a budgeted machine hour rate. Any amount of under or over allocation is written off to Cost of Goods Sold.
1. Compute the budgeted manufacturing overhead rate. Required
2. Prepare the journal entries to record the allocation of manufacturing overhead.
3. Compute the amount of under or overallocation of manufacturing overhead. Is the amount material? Prepare a journal entry to dispose of this amount.