Question

Question 27: Moody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company following estimates 100,000 Machine-hours required to support estimated production Fixed manufacturing overhead cost ble mamahcturtgne-hour S3.00 per machine-hourS650,000 Required: 1. Compute the predetermined overhead rate. 2. During the year, Job 400 was started and completed. The following information was available with respect to this job: S450 Direct materials requisitioned Direct labor cost S210 Machine-hours used 40 Compute the total manufacturing cost assigned to Job 400. ring the year, the company worked a total of 146,000 machine-hours on 3. Du all iobs and incurred actual manufacturing overhead costs of $1,350,000 What is the amount of underapplied or o this amount were verapplied overhead for the year? If journal entry increase or decrease net operating income?d would th

Answer 1

a)
Estimated total manufacturing overhead cost = $650,000 + ($3.00 per MH)(100,000 MHs)	$   9,50,000.00
Predetermined overhead rate = Estimated Total Manufacturing Overhead/Estimated Machine Hour
Predetermined overhead rate = $950,000/100,000	$               9.50	Per Machine Hours
b)	Job 400
Direct Material	$           450.00
Direct Labour	$           210.00
Manufacturing Overhead = $9.50 x 40 MH	$           380.00
Total Manufacturing Cost	$        1,040.00
c)
Estimated Manufacturing Overhead  = 146,000 MH x $9.50	$ 13,87,000.00
Actual Manufacturing Overhead	$ 13,50,000.00
Overapplied Manufacturing Overhead	$      37,000.00
Journal Entry
Manufacturing Overhead	$      37,000.00
Cost of Goods Sold		$    37,000.00
Over-applied overhead reflects the fact that too much overhead was applied to production, so closing over-applied overhead causes Cost of Goods Sold to decrease so it will increases the Net operating income.