Question

QUESTION 2 Thave budgeted $400000 in overhead costs and 40,000 machine hours. I actually spent $410,000 in overhead and used 39000 machine hours A $20,000 cost of goods sold 20000 budgeted overhead per machine hour Manufacturing overhead applied overhead manufacturing overhead under or over applied overhead? Cost of good sold How much over or under applied? D under journal entry to correct overhead E over F. $350,000 G $10

Answer 1

(1) Option (G) is correct answer

Budgeted overhead per machine hour = Budgeted overheads / Budgeted machine hours

Budgeted overhead per machine hour = $400000 / 40000 = $10

(2) Option (F) is correct answer

Applied overheads are budgeted overheads based upon actual machine hours.

Applied overhead = Budgeted overhead per machine hour * Actual machine hours

Applied overhead = $10 * 39000 = $390000

(3) Option (D) is correct answer.

Applied overheads = $390000

Actual overheads = $410000

Since actual overheads are more than the applied overheads, so there will be under applied overheads.

(4) Option (A) is correct

Under applied overhead = Actual overhead - Applied overhead

Under applied overhead = $410000 - $390000 = $20000

(5) Option (B) is correct

Since the overhead is under applied, so we will increase cost of goods sold by debiting it. The journal entry is:

Debit Cost of goods sold $20000

Credit Manufacturing overhead $20000