Prorate Under- or Overapplied Overhead
Mark Corporation estimates its manufacturing overhead to be $90,000 and its direct labor costs to be $200,000 for year 1. The actual direct labor costs were $50,000 for Job 301, $75,000 for Job 302, and $100,000 for Job 303 during year 1; the actual manufacturing overhead was $97,000. Manufacturing overhead is applied to jobs on the basis of direct labor costs using predetermined rates.
Prepare an entry to allocate the under- or overapplied overhead. Overhead applied in each of the inventory accounts is as follows:
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Work-in-process inventory
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$10,125
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Finished goods inventory
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30,375
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Cost of goods sold
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60,750
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