In December 2016, Infodeo established its predetermined
overhead rate for movies produced during 2017 by using the following cost
predictions: overhead costs, $1,680,000, and direct labor costs, $480,000. At
year-end 2017, the company’s records show that actual overhead costs for the
year are $1,652,000. Actual direct labor cost had been assigned to jobs as
follows
Movies completed and released $ 425,000
Movies still in production 50,000
Total actual direct labor cost $ 475,000
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.
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