Harwood Company uses a job-order costing system that applies overhead cost to jobs on the basis of
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 $2.60 per machine-hour was based on a cost formula that estimates $257,400 of total manufacturing overhead for an estimated activity level of 99,000 machine-hours.
Required:
1. Assume that during the year the company actually works only 64,700 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.
Required 1:
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) | 40,000 | (a) | (Direct materials) | 900,000 | ||||
(Indirect materials) | 9,900 | (Direct labor) | 109,000 | |||||
(Indirect labor) | 79,000 | (Overhead) (a) | ||||||
(Utilities) | 46,000 | |||||||
(Insurance) | 8,900 | |||||||
(Depreciation) | 64,000 | |||||||
Balance |
Required 2A:
Compute the amount of underapplied or overapplied overhead for the year and show the balance in your Manufacturing Overhead T-account from Req 1.
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Required 2B:
Prepare a journal entry to close the company's underapplied or overapplied overhead to Cost of Goods Sold. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
- Record the entry to close the balance of the manufacturing overhead account to COGS account.
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College Mathematics for Business Economics Life Sciences and Social Sciences
ISBN: 978-0321614001
12th edition
Authors: Raymond A. Barnett, Michael R. Ziegler, Karl E. Byleen