If the predetermined overhead allocation rate is 245% of direct labor cost,and the Baking 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:

Question

Quizplus · Accepted Answer

To record the allocation of overhead to the products processed in the Baking Department, we would need to multiply the direct labor cost by the predetermined overhead allocation rate of 245%.

Overhead allocated = Direct labor cost x Predetermined overhead allocation rate
Overhead allocated = $10,000 x 245%
Overhead allocated = $24,500

Therefore, the entry to record the allocation of overhead to the products processed in the Baking Department would be:

Overhead allocated     $24,500
   Manufacturing Overhead  $24,500

If the Predetermined Overhead Allocation Rate Is 245% of Direct