Question

Please show work. Thank you.

Group Problem 1 Predetermined Overhead Rate; Application of Overhead; Variances; Journal Entries Harris Company uses a normal job-order costing system. Budgeted overhead for the coming year is $600,000. Expected actual activity is 200,000 direct labor hours. During the year, Harris worked a total of 190,000 direct labor hours and actual overhead totaled $562,000. REQUIRED 1. Compute the predetermined overhead rate for Harris Company. 2. How much overhead will the company assign to the work in process account? Prepare the journal entry that corresponds to this assignment. 3. Compute the overhead variance and label the variance as under-or over-applied overhead. Assuming the variance is not material, write the journal entry that disposes of the variance at the end of the year.

Answer 1

1) Overhead rate = 600000/200000 = 3 per labor hour

2) Applied overhead = 190000*3 = 570000

Date	account and explanation	Debit	Credit
	Work in process	570000
	Manufacturing overhead		570000
	(To record applied overhead)

3) Over applied overhead = 570000-562000 = 8000

Date	account and explanation	Debit	Credit
	Manufacturing overhead	8000
	Cost of goods sold		8000
	(To record over applied overhead)