Question

Harwood Company uses a job-order costing system that applies overhead cost to jobs on the basis of machine-hours. The company's predetermined overhead rate of $2.80 per machine-hour was based on a cost formula that estimates $232,400 of total manufacturing overhead for an estimated activity level of 83,000 machine-hours.

Required:

1. Assume that during the year the company works only 78,000 machine-hours and incurs the following costs in the Manufacturing Overhead and Work in Process accounts: Compute the amount of overhead cost that would be applied to Work in Process for the year and make the entry in your T-accounts.

2A. Compute the amount of underapplied or overapplied overhead for the year and show the balance in your Manufacturing Overhead T-account.

2B. Prepare a journal entry to close the company's underapplied or overapplied overhead to Cost of Goods Sold.

Answer 1

Answer: (1) The a mount of overhead cost to be applied to work in process $14,000 (2) balance in manufacturing overhead T Account $9,800(3) Dr : Cost of good sold $9,800 Cr : manufacturing overhead $9,800

Step-by-step explanation:

The question is not complete here is the missing part of the question

Manufacturing overhead

Maintenance 24,000

Indirect material 8,300

Indirect labour 82,000

Utilities 36,000

Insurance 7,300

Depreciation 65,000

Work in process

Direct materials 740,000

Direct Labour 93,000

Here is the solution

Applied overhead cost = machine hours × predetermined overhead rate

2.80 × 78,000

= $218,400

Overapplied overhead cost = Estimated overhead - Applied overhead

= 232,400 - 218,400

= $14,000

(2) Manufacturing overhead T

Dr. Cr

$ $

Maintenance 24,000. Applied overhead 218,000

Indirect material 8,300. Overapplied overhead 14,000

Indirect labour 82,000

Utilities 36,000

Insurance 7,300

Depreciation 65,000

Bal c/d 9,800

--------------- ------------------

232,400. 232,400

--------------- --------------------

(3) The journal entry will be

Dr : Cost of good sold $9,800

Cr : Manufacturing overhead $9,800