Question

Exercise 15-5 Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $292,552 for the year, and machine usage is estimated at 126,100 hours. For the year, $399,060 of overhead costs are incurred and 130,500 hours are used.

Compute the manufacturing overhead rate for the year. (Round answer to 2 decimal places, e.g. 1.52.) Manufacturing overhead rate $ per machine hour SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT

What is the amount of under- or overapplied overhead at December 31? Manufacturing Overhead $ UnderappliedOverapplied SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT

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

Answer 1

A) CALCULATE MANUFACTURING OVERHEAD RATE :

MANUFACTURING OVERHEAD RATE = MANUFACTURING OVERHEAD/MACHINE HOUR

                                                          = 292552/126100

MANUFACTURING OVERHEAD RATE = 2.32 PER MACHINE HOUR

B) CALCULATE UNDER OR OVER APPLIED OVERHEAD :

UNDER/OVER APPLIED OVERHEAD = APPLIED OVERHEAD-ACTUAL OVERHEAD

                                                         = (130500*2.32)-399060

               UNDER APPLIED OVERHEAD = 96300

C) JOURNAL ENTRY :

DATE	ACCOUNTS & EXPLANATION	DEBIT	CREDIT
	COST OF GOODS SOLD A/C	96300
	MANUFACTURING OVERHEAD		96300
	( TO RECORD UNDER APPLIED OVERHEAD)