Questions
SU25-BL-BUS-A325-5063 Practice Test #1
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The predetermined manufacturing overhead rate at Browning Manufacturing Company is based on direct labor cost. The annual budget for 2022 called for $300,000 of direct labor cost and $360,000 of manufacturing overhead costs. The following account balances as were selected from the general ledger: Actual manufacturing overhead for January amounted to $59,000. Actual direct labor cost for January was $56,000. Cost of direct materials placed in production during January totaled $100,000. a. Determine the predetermined manufacturing overhead rate. Answer (a): The predetermined overhead rate is $1.20 per DL $ b. Determine whether manufacturing overhead is over-allocated or under-allocated and by what amount. Answer (b): Manufacturing overhead is Over-allocated by $8,200 c. What journal entry would need to be made to dispose of the under-/over-allocation (direct write-off method)? Answer (c): The correct journal entry is Debit MOH for 8,200 and credit COGS for 8,200
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Topic context: This is about calculating the predetermined overhead rate, evaluating MOH under- or over-allocation, and presenting the journal entry for disposal using the direct write-off method.
Option 1: '$1.20 per DL $'
- Why this is correct: The predetermined MOH rate is computed as budgeted MOH divided by budgeted direct labor cost: $360,000 / $300,000 = 1.20, which is exactly $1.20 per direct labor dollar. This matches the standard method and the given value in the problem.
- Why the option is correct for part (a): It aligns with the problem statement and the computed rate.
- Why it could be mistaken in other cont......Login to view full explanationLog in for full answers
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