Question

Manufacturing overhead was estimated to be $312,000 for the year along with 20,800 direct labor hours. Actual manufacturing overhead was $335.000, and actual labor hours were 23,300. To dispose of the balance in the Manufacturing Overhead account, which of the following would be correct? Multiple Choice Cost of Goods Sold would be debited for $23,000. Cost of Goods Sold would be credited for $23,000 Cost of Goods Sold would be credited for $14.500. Cost of Goods Sold would be debited for $14.500

Answer 1

Estimated manufacturing overheads = $312,000

Estimated Direct labor Hours =20,800

Predetermined Overhead rate = Estimated manufacturing overheads / Estimated Direct labor Hours

=312,000 / 20,800

= $15 Per Direct labor hours

Actual direct labor hours = 23,300

Overhead applied = Actual direct labor hours x Predetermined Overhead rate

= 23,300 x 15

= $349,500

Actual manufacturing overheads = $335,000

Over applied overheads = Overhead applied - Actual manufacturing overheads

= 349,000-335,000

=$14,500

To dispose of over applied manufacturing overhead , cost of goods sold will be credited and manufacturing overhead will be debited by $14,500

Third option is the Correct option.

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