Question

Exercise 3-9 Applying Overhead; T-accounts; Journal Entries (LO3-1, LO3-2, L03-4) 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 $2.90 per machine-hour was based on a cost formula that estimates $246,500 of total manufacturing overhead for an estimated activity level of 85,000 machine-hours. Required: 1. Assume that during the year the company works only 80,000 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. 28. 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. Reg 1 Req 2A Reg 28 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 (Maintenance) 26,000 (a) (Direct materials) 700.000 (Indirect materials) 8,500 (Direct labor) 95,000 (Indirect labor) 86,000 (Overhead) (a) (Utilities) 37,000 (Insurance) 7,500 (Depreciation) 72,000 Balance

Answer 1

Manufacturing overhead (Maintenance ) 26000 232000 19) (Indirect matenials) 85oo (Indirect labor) 86000 ( Utilities) 37000 t Insurance) 7500 Depreciation) 72000 Balance 5000 Work in Process Direct materials) (Direct labor) lovewhead ) (a) 760000 95000 232000 Note I Manufacturing Over head Applied = Number of machine hour y Predeteumined Worlu Overhead Rate Number of machine hours work 80 000 machine-hour. Predeleumined Overhead Rede - $ 2.90 peu machine hours. $ 232000 Manufacturing overhead Applied = 80000 x $ 2.90 2. A. Under-applied Manufacturing overhead $ 5000 Note 2 Total manu over head $237000 nanufacturing Applied Manufacturing overhead 1$4232 000) $ Sooo Undeu-applied overhead

Total Manufacturing Overhead = 26000 + $500 + 86000 + 37000 +7500+ 72000 - $ 237000 overhead is a situation in which Actual Undex applied Manufacturing overhead is a manufacturing overhead incurred exceeds Applied manufacturing overhead. balance of Manufacturing over head Entry to close the Account to Cobs account. General Toumal Debit Credit Event 1. $ 5000 $ 5000 Cost of Goods sold Manufacturing overhead (Bling Undey - applied Manufacturing) oveubead