Question

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 $2.80 per machine-hour was based on a cost formula that estimates $232,400 of total manufacturing overhead for an estimated activity level of 83,000 machine-hours. Required: 1. Assume that during the year the company works only 78,000 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. Req 1 Req 2A Req 2B 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 740,000 (Maintenance) 24,000 (Direct materials) 8,300 93,000 (Direct labor) (Overhead) (a) (Indirect materials) (Indirect labor) (Utilities) (Insurance) (Depreciation) Balance 82,000 36,000 7,300 65,000 Req 1 Req 2A >

Answer 1

Answer with working notes is given below

(a) Work in process Direct Material $740,000 Direct Labor $93,000 Overheads (a) $218,400 Manufacturing Overhead Maintenance $24,000 $218,400 Indirect materials $8,300 Indirect labor $82,000 Utilities $36,000 Insurance $7,300 Depreciation $65,000 Balance $4,200 working notes: Total manufacturing overheads Applied manufacturing Overheads Under-applied Overheads $222,600 $218,400|(78,000*$2.80) $4,200 2 Manufacturing overhead $4,200 Under-applied 3 Event Credit Debit $4,200 General Journal Cost of goods sold To Manufacturing overheads (Being under-applied manufacturing overheads) $4,200