Question

Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are estimated to total $347,325 for the year, and machine usage is estimated at 126,300 hours. For the year, $375,125 of overhead costs are incurred and 132,700 hours are used. Compute the manufacturing overhead rate for the year. (Round answer to 2 decimal places, 1.25.) Manufacturing overhead rate per machine hour SHOW LIST OF ACCOUNTS What is the amount of under or overapplied overhead at December 31? Manufacturing Overhead SHOW LIST OF ACCOUNTS Prepare the adjusting entry to assign the under or overapplied overhead for the year to cost of goods sold. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS

Answer 1

Solution 1:

Predetermined overhead rate = Estimated overhead / Estimated machine hours

= $347,325 / 126300 = $2.75 per machine hour

Solution 2:

Overhead applied = 132700 * $2.75 = $364,925

Actual overhead = $375,125

Under applied overhead = $375,125 - $364,925 = $10,200

Solution 3:

Journal Entries
Event	Particulars	Debit	Credit
1	Cost of goods sold Dr	$10,200.00
	To Factory overhead		$10,200.00
	(To close under applied overhead to COGS)