Question - Accounting for manufacturing overhead Prestige woods manufactures jewelry boxes. the primary materials (wood, brass, and glass) and direct labor are assigned directly to the products. Manufacturing overhead costs are allocated based on machine hours. data for 2018 follows:
Estimated Actual
Machine hours 27,000 hours 32,100 hours
Maintenance labor(repairs to equipment) $17,000 $23,500
Plant supervisors salary 48,000 50,000
Screws, nails, and glue 28,000 45,000
Plant utilities 44,000 92,850
Freight out 37,000 49,500
Depreciation on plant and equipment 85,400 83,000
Advertising expense 46,000 53,000
Requirements -
1. Compute the predetermined overhead allocation rate. Round to two decimal places.
2. Post actual and allocated manufacturing overhead to the manufacturing overhead T-account.
3. Prepare the journal entry for underallocated or overallocated overhead.
4. The predetermined overhead allocation rate usually turns out to be inaccurate .Why don't accountants just use the manufacturing overhead rate?