Question

Smith Foundry uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs based on the machine hours required. At the beginning of the year, the company excepted to incur the following:
Manufacturing overhead costs $600,000
Direct labor cost $1,550,000
Machine hours 75,000
At the end of the year, the company had actually incurred the following:
Direct labor cost $1,210,000
Depreciation on manufacturing plant and equipment $470,000
Property taxes on plant $19,500
Sales salaries $26,000
Delivery drivers' wages $13,000
Plant janitors' wages $8,000
Machine hours 54,000 hours
Smith's accountant found an error in the expenses records from the year reported. Depreciation on manufacturing plant and equipment was actually $400,000 not the $47,000 that had originally been reported. The unadjusted cost of Goods sold balance at year-end was $590,000. The manufacturing overhead allocated to jobs was $432,000. Prepare the journal entry (entries) to record manufacturing overhead costs incurred.

Answer 1

Answer and Explanation:

The journal entry to record the manufacturing overhead cost incurred is shown below:

Manufacturing overhead Dr $427,500

          To Accumulated depreciation - Plant & Equipment $400,000

          To Property tax payable $19,500

          To Wages payable $8,000

(Being the manufacturing cost incurred is recorded)