its predetermined overhead rate for jobs

In December 2016, Custom Mfg. established its predetermined overhead rate for jobs produced during 2017 by using the following cost predictions: overhead costs, $280,000, and direct materials costs, $200,000. At year-end 2017, the company’s records show that actual overhead costs for the year are $703,500. Actual direct material cost had been assigned to jobs as follows.

Jobs completed and sold$370,000
Jobs in finished goods inventory77,000
Jobs in work in process inventory49,000
Total actual direct materials cost$496,000

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.


In December 2016, Shire Computer’s management establishes the 2017 predetermined overhead rate based on direct labor cost. The information used in setting this rate includes estimates that the company will incur $754,000 of overhead costs and $580,000 of direct labor cost in year 2017. During March 2017, Shire began and completed Job 13-56.

1. What is the predetermined overhead rate for 2017?
2. Using the information on the following job cost sheet, determine the total cost of the job.

Leave a Reply

Your email address will not be published.