Ques-2

Question 2 (23 points) Saved June Company estimated that it would work 5,000 machine hours and incur $15,000 in total manufacturing overhead costs for the year. They use a job-order costing system in which overhead is applied to jobs based on machine hours. During the first year of operations, they had the following selected transactions: a. Purchased materials for $25,000 on account. b. Total salaries and wages of $9,000 were paid. Of this amount, $1,000 was for administrative salaries, $7,000 was for direct labour and the remainder was for indirect labour. c. Direct materials used were $20,000. Indirect materials used were $4,000. d. Insurance costs were incurred and paid in cash: $8,000 in the factory and $6,000 in the administrative office. e. Overhead was applied. The company recorded 5,200 machine hours for the year. f. All of the jobs were completed and transferred. Required: 1. Calculate the predetermined overhead rate. (2 marks) 2. Prepare journal entries to record the above events, (18 marks) (Identify each journal entry by letter in the date column. ) 3. Calculate the balance in the manufacturing overhead account, and label it as either underapplied or overapplied