Managerial Accounting

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What You Know Using Journal Entry & Predetermined Overhead Rate


Fielding Inc. estimates their manufacturing overhead as a percent of direct materials used. In the current year, the predetermined overhead rate is 120% of direct materials. One of the journal entries at the end of the current month to record this month's production is shown below.

Journal entry: DEBIT CREDIT
Work in Process \$55,200
Manufacturing Overhead Control \$55,200

What can you know from studying this journal entry and knowing the predetermined overhead rate?


They spent \$55,200 in factory support costs during the month.


Direct Materials for the month were \$46,000


Direct Materials for the month were \$66,240


Direct Material costs are generally 20% higher than factory support costs.