Compute the manufacturing overhead rate and under- or overapplied overhead

Ikerd Company applies overhead to jobs on the basis of machine hours used. Overhead costs are expected to total

$300,000 for the year, and machine usage is estimated at 125,000 hours. For the year, $322,000 of overhead costs

are incurred and 130,000 hours are used.

Instructions

(a)

Compute the manufacturing overhead rate for the year.

(b)

What is the amount of under-or overapplied overhead at December 31?

(c )

Prepare the adjusting entry to assign the under- or overapplied overhead for the year to cost of goods sold.

NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .

After you have completed E2-5, consider the following additional question.
1.	Assume that the estimated total overhead for the year changed to $350,000. Determine
	the impact on this change on the overhead rate, the amount of manufacturing overhead
	over(under) applied. Revise the journal to dispose of over (under) applied overhead.