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 $2.50 per machine-hour was based on a cost formula that estimates $242,500 of total manufacturing overhead for an estimated activity level of 97.000 machine hours. 00:35:41 Required: 1. Assume that during the year the company works only 92,000 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. Req 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. Work in Process 880.000 107.000 (Direct materials) (Direct labor) Overhead) (a) Manufacturing Overhead 38,000 9,700 70,000 44.000 8.700 62000 Maintenance) (Indirect materials) (Indirect labor) (Usities) (Insurance) (Depreciation) Balance he Req2A >

Answer 1

1) T account

Manufacturing overhead					Work in process
Maintenance	38000	230000	a) Work in process		Direct material	880000
Indirect material	9700				Direct labor	107000
Indirect labor	70000				a) Manufacturing overhead	230000
Utilities	44000
Insurance	8700
Depreciation	62000
Balance	2400

2a) Under applied overhead by $2400

2b) Journal entry

Date	account and explanation	Debit	Credit
	Cost of goods sold	2400
	Manufacturing overhead		2400
	(To record under applied overhead)