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 $249,200 of total manufacturing overhead for an estimated activity level of 89,000 machine-hours.

Required:

1. Assume that during the year the company works only 84,000 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.

Req 1 Req 2A Req 2B (a) 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. Manufacturing Overhead Work in Process (Direct (Maintenance) 30,000 800,000 materials) (Indirect 8,900 (Direct labor) 99,000 materials) (Indirect labor) 80,000 (Overhead) (a) (Utilities) 43.000 (Insurance) 7,900 (Depreciation) 70,000 Balance Reg 1 Req 2A >

Answer 1

page! Given that Haswood company uden a wood company uses a job 09/de. Conting system that Applies oveghead cost jobs on the basis of machine hou 98. The company's paredetegimined oveghead gate of $ 2.80 peg machine -houg was based on a cost fogmula that estimates $249,900 of total Manufactusing ovegyhead fogy an estimated Activity level of 89,000 machine housle. O Manufactusing Ouesthead Works in psyocess Maintenance 30,000.00 235,200.00 Ovesy head Applied (a) digject Matespial 800,000.00 Indigect Mategial 8,900.00 4,600.00

Undegy Applied ouest les Applied ovesi head page 2 Digject babo91 abo91 99,000.00 99,0 Ovelhead (a) Indispect labog 80,000.00 235,200.00 Utilities Insurance 43,000.00 4,900.00 Depojeciation 90,000.00 End Bal Oueshead Applied = 84,000 Magjch 1998% $.80 - $ 235,800 Jousnal Ent sy Date pasticulasyo Doj. Amt. Col. Amt. a Wolls in process 235,200.00 Manufacturing oves head 235,200.00 (Recogid the ovest head Applied) 2A) Actual oveohead Applied oveshead Undegy Applied over head 239,800.00 235,200.00 4,600.00

2B) Jouginal Entry page 3 Całe pashticula98 Dg. Amt. Cop. Amt. Cost of Goods Sold Manufactugling Oveghead 4,600.00 4,600.00 (Recogid the Undegy Applied oveghead)