Question

Cambridge Manufacturing Company applies manufacturing overhead on the basis of machine hours. At the beginning of the year, the company estimated its total overhead cost to be $325,000 and machine hours to be 25,000. Actual manufacturing overhead and machine hours were $372,000 and 26,000, respectively. Required: 1. & 2. Prepare the journal entries for actual and applied manufacturing overhead and transfer of manufacturing overhead account balance to cost of goods sold. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet < 1 1 2 3 Record the actual manufacturing overhead cost incurred. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal

Answer 1

Predetermined overhead rate = $325,000 / 25,000 = $13 per hour
Acutal hours = 26,000
Overhead applied = 26,000 * $13 = $338,000

Recording of Journal entries are as follows:-

Credit Transaction a). Account Titles Debit Manufacturing overhead $ 3,72,000.00 Account Payables $ (Recording of actual manufacturing overhead incurred on accrual basis) 3,72,000.00 b). $ 3,38,000.00 Work in process Manufacturing overhead (Recording overhead applied to production) $ 3,38,000.00 b). $ 34,000.00 Cost of Goods sold $ 34,000.00 Manufacturing overhead (Recording underapplied overhead and transferred to COGS) ($372,000 - $338,000 = $34,000)