Question

The following data pertain to the Oneida Restaurant Supply Company for the year just ended. Budgeted sales revenue $ 210,000 Actual manufacturing overhead 364,000 Budgeted machine hours (based on practical capacity) 20,000 Budgeted direct-labor hours (based on practical capacity) 20,000 Budgeted direct-labor rate $ 13 Budgeted manufacturing overhead $ 336,000 Actual machine hours 11,000 Actual direct-labor hours 18,000 Actual direct-labor rate $ 16 Required: Prepare a journal entry to add to work-in-process inventory the total manufacturing overhead cost for the year, assuming: 1. The firm uses actual costing. 2. The firm uses normal costing, with a predetermined overhead rate based on machine hours. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer:

Explanation:

The journal entry is shown below:

1. Under Actual costing:

Work in progress inventory Ac Dr $364,000

        To Manufacturing overhead A/c  $364,000

(Being manufacturing overhead is added to the work in progress inventory)

2. Under Normal costing,

First we have to compute the predetermined overhead rate which is shown below:

Predetermined overhead rate = (Total estimated manufacturing overhead) ÷ (estimated machine hours)

= $336,000 ÷ 20,000 hours

= $16.8

Now we have to find the actual overhead which equal to

= Actual machine hours × predetermined overhead rate

= 11,000 hours × $16.8

= $184,800

Work in progress inventory Ac Dr $184,800

        To Manufacturing overhead A/c  $184,800

(Being manufacturing overhead is added to the work in progress inventory)