Question

Updates N Sane updane Help S Exercise 3-9 Applying Overhead; T-accounts; Journal Entries [LO3-1, 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 $2.40 per machine-hour was based on a cost formula that estimates $192,000 of total manufacturing overhead for an estimated activity level of 80,000 machine-hours. Required 1. Assume that during the year the company works only 75,000 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 underappliled 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 Complete this question by entering your answers in the tabs below. Req 1 2A Req 28 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. 21,000 (Direct labor) 90.000 Indirect labor) Ovestead)(a) 32,000 7,000 6,000 Balance 3

Answer 1

Answer 1
Amount of overhead applied to work in process for the year = Actual machine hours worked during the year * Overhead application rate
Amount of overhead applied to work in process for the year = 75000 hours * $2.40 per machine hour = $1,80,000
Entry in T-accounts
Work in process					Answer 2B
Direct Materials	$710,000.00				Journal entry to close company's underapplied overheads to cost of goods sold
Direct Labor	$90,000.00				Account Titles	Debit	Credit
Overheads	$180,000.00				Cost of Goods sold	$4,000.00
					Manufacturing Overheads		$4,000.00
Answer 2A
Underapplied or overapplied overheads = Actual overheads incurred - Applied Overheads
Underapplied overheads = $184000 - $180000 = $4000
Manufacturing Overheads
Maintenance	$21,000.00	Work in process	$180,000.00
Indirect Materials	$8,000.00
Indirect Labor	$60,000.00
Utilities	$32,000.00
Insurance	$7,000.00
Depreciation	$56,000.00
Balance	-$4,000.00