3.13 Accounting for manufacturing overhead. (15 min) 1 Budgeted manufacturing overhead rate €7,000,000 ÷ 200,000 = €35 per machine-hour 2 Work in progress control €6,825,000 Manufacturing overhead allocated €6,825,000 (195,000 machine-hours ÷ €35 = €6,825,000) 3 €6,825,000 – €6,800,000 = €25,000 overallocated, an insignificant amount Manufacturing overhead allocated €6,825,000 Manufacturing department overhead control €6,800,000 Cost of goods sold €25,000 3.14 Proration of overhead. (20 min) 1 Budgeted manufacturing overhead rate is €4,800,000 ÷ 80,000 = €60 per machine- hour. 2 Manufacturing overhead underallocated = manufacturing overhead incurred – manufacturing overhead allocated = €4,900,000 – €4,500,000* = €400,000 * €60 × 75,000 actual machine-hours = €4,500,000.
Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5 th Edition, Instructor’s Manual © Pearson Education Limited 2012 Share with your friends: |