Question

Exercise 3-9 (Algo) Applying Overhead; T-accounts; Journal Entries [LO3-1, LO3-2, LO3-4] 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 $2.70 per machine-hour was based on a cost formula that estimates $243,000 of total manufacturing overhead for an estimated activity level of 90,000 machine-hours. Required: 1. Assume that during the year the company works only 85,000 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. Complete this question by entering your answers in the tabs below.

Answer 1

Answer-

ompute 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 (Maintenance) 31,000 229,500   (a)Applied overhead (85,000*2.70) (Direct materials) 810,000 (Indirect materials) 9,000 (Direct labor) 100,000 (Indirect labor) 82,000 (Overhead) (a) 229,500 (Utilities) 37,000 (Insurance) 8,000 (Depreciation) 66,000    Balance 3,500

2a) Under applied overhead = $3,500

2b) Adjusting entry

Date	Account and Explanation	Debit	Credit
	Cost of goods sold	3,500
	Manufacturing overhead		3,500
	(To record under applied overhead)