If the predetermined overhead allocation rate is 225% of direct labor cost,and the Mixing Department's direct labor cost for the reporting period is $10,000,the following entry would be made to record the allocation of overhead to the products processed in this department:
Goods in Process Inventory,Mixing Dept …… 225,000
Factory Overhead……………………….. 225,000

Question

Quizplus · Accepted Answer

The correct overhead allocation would be $22,500 (225% of $10,000), not $225,000.

If the Predetermined Overhead Allocation Rate Is 225% of Direct