Question

In December 2016, Infodeo established its predetermined overhead rate for movies produced during 2017 by using the following cost predictions: overhead costs, $2,450,000,and direct labor costs, $490,000. At year-end 2017, the company’s records show that actual overhead costs for the year are $2,228,500. Actual direct labor cost had been assigned to jobs as follows.

Movies completed and released	$	400,000
Movies still in production		48,000
Total actual direct labor cost	$	448,000

1. Determine the predetermined overhead rate for 2017.
2&3. Enter the overhead costs incurred and the amounts applied during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied.
4. Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold.

Overhead Rate
Choose Numerator:	/	Choose Denominator:	=	Overhead Rate
	/		=	Overhead rate
	/		=	0

	0	0

Date	General Journal	Debit	Credit
Dec. 31

Answer 1

Overhead rate

Choose numerator	/	Choose denominator	=	Overhead rate
Estimated overhead	/	Estimated activity base	=	Overhead rate
2450000	/	490000	=	500% of labor cost

Overhead T account

Manufacturing overhead	2228500	Work in process (448000*5)	2240000
		Bal	11500

Journal entry

Date	account and explanation	debit	credit
	Manufacturing overhead	11500
	Cost of goods sold		11500
	(To record over applied overhead)