Question

Exercise 3-9 Applying Overhead; T-accounts; Journal Entries [L03-1, LO3-2, LO3-4] 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 works only 94,000 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 Solo Complete this question by entering your answers in the tabs below Req 1 Req 2A Req 2B 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 40,000 9,900 79,000 46,000 8,900 64,000 Work in Process (Maintenance) (Indirect materials) (Indirect labor) (Utilities) (Insurance) (Depreciation) Balance (Direct materials) (Direct labor) (Overhead) (a) 900,000 109,000 Req 1 Req 2A>

Answer 1

1) T account

Manufacturing overhead					Work in process
Maintenance	40000	94000*2.60 = $244400	Work in process		Direct material	900000
Indirect material	9900				Direct labor	109000
Indirect labor	79000				Manufacturing overhead	244400
Utilities	46000
Insurance	8900
Depreciation	64000
Balance	3400

2) Under applied manufacturing overhead = (247800-244400) = $3400

3) Journal entry

Date	account and explanation	debit	credit
	Cost of goods sold	3400
	Manufacturing overhead		3400
	(To record under applied)