In December 2014, Infodeo established its predetermined overhead rate for movies produced during year 2015 by using the following cost predictions: overhead costs, $2,025,000,and direct labor costs, $450,000. At year-end 2015, the company’s records show that actual overhead costs for the year are $2,431,600. Actual direct labor cost had been assigned to jobs as follows.
Movies completed and released $ 500,000
Movies still in production 43,000
Total actual direct labor cost $ 543,000
1. Determine the predetermined overhead rate for year 2015.
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.
