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26 February, 22:54

PB8.

LO 4.6Queen Bee’s Honey, Inc., estimated its annual overhead to be $110,000 and based its predetermined overhead rate on 27,500 direct labor hours. At the end of the year, actual overhead was $106,000 and the total direct labor hours were 29,000. What is the entry to dispose of the overapplied or underapplied overhead?

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  1. 27 February, 00:07
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    Debit Credit

    Applied overheads $110,000

    Cost of sales (over applied overheads) $4,000

    Overhead control account $106,000

    Explanation:

    Since the estimated overhead amounting to $110,000 are greater than the actual overheads amounting to $106,000, therefore the overheads are overapplied by $4,000.

    The journal entry to disposed off the overapplied overheads are given below:

    Debit Credit

    Applied overheads $110,000

    Cost of sales (over applied overheads) $4,000

    Overhead control account $106,000
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