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Direct Costs for Trenton Glass Works

The following information pertains to Trenton Glass Works for the year just ended.

Budgeted direct-labor cost: 70,000 hours (practical capacity) at $16 per hour
Actual direct-labor cost: 80,000 hours at $17.50 per hour

Budgeted manufacturing overhead: $997,500

Actual selling and administrative expenses: 432,000

Actual manufacturing overhead:

Depreciation $231,000
Property taxes 23,000
Indirect labor 81,000
Supervisory salaries 201,000
Utilities 58,000
Insurance 32,000
Rental of space 301,000
Indirect material (see data below) 80,000
Indirect material:

Beginning inventory, January 1 48,000
Purchases during the year 95,000
Ending inventory, December 31 63,000

1. Compute the firm's predetermined overhead rate, which is based on direct-labor hours.

Predetermined overhead rate $ per hour

2. Calculate the overapplied or underapplied overhead for the year.


3. Prepare a journal entry to close out the Manufacturing Overhead account into Cost of Goods Sold.

General Journal Debit Credit.

Solution Summary

The solution discuses direct costs for Trenton Glass Works.