Question

Harwood Company uses a job-order costing system that applies overhead cost to jobs on the basis...

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 $2.80 per machine-hour was based on a cost formula that estimates $232,400 of total manufacturing overhead for an estimated activity level of 83,000 machine-hours. Required:

1. Assume that during the year the company works only 78,000 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 Sold.

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 Work in Process
(Maintenance) 24,000 (a) (Direct materials) 740,000
(Indirect materials) 8,300 (Direct labor) 93,000
(Indirect labor) 82,000 (Overhead) (a)
(Utilities) 36,000
(Insurance) 7,300
(Depreciation) 65,000
Balance

Homework Answers

Answer #1

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 Work in Process
(Maintenance) 24,000 Work in process (78000*2.8) (a) 218400 (Direct materials) 740,000
(Indirect materials) 8,300 (Direct labor) 93,000
(Indirect labor) 82,000 (Overhead) (a) 218400
(Utilities) 36,000
(Insurance) 7,300
(Depreciation) 65,000
Balance 4200

b) Under applied overhead = Applied overhead-Actual overhead

= 218400-222600

Underapplied overhead = 4200

c) Journal entry

Date account and explanation debit credit
Cost of goods sold 4200
Manufacturing overhead 4200
(To record under applied overhead)
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Ravsten Company uses a job-order costing system.    The company applies overhead cost to jobs on...
Ravsten Company uses a job-order costing system.    The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 40,000 machine-hours and incur $178,000 in manufacturing overhead cost. The following transactions occurred during the year:    a. Raw materials requisitioned for use in production, $194,000 (70% direct and 30% indirect). b. The following costs were incurred for employee services:      Direct labor $ 164,000 Indirect labor $ 22,000...
Benner Company uses a job-order costing system and applies manufacturing overhead to jobs using a predetermined...
Benner Company uses a job-order costing system and applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labor hours. Manufacturing overhead and direct labor hours were estimated at $66,000 and 22,000 hours, respectively. In June, Job #461 was completed. Materials costs on the job totaled $4,923 and labor costs totaled $2,325 at $7.50 per hour (310 hours worked on this job). At the end of the year, it was determined that the company worked 23,975 direct...
Ravsten Company uses a job-order costing system.    The company applies overhead cost to jobs on...
Ravsten Company uses a job-order costing system.    The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 34,000 machine-hours and incur $176,800 in manufacturing overhead cost. The following transactions occurred during the year:    a. Raw materials requisitioned for use in production, $308,000 (80% direct and 20% indirect). b. The following costs were incurred for employee services:      Direct labor $ 179,000 Indirect labor $ 37,000...
Gitano Products operates a job-order costing system and applies overhead cost to jobs on the basis...
Gitano Products operates a job-order costing system and applies overhead cost to jobs on the basis of direct materials used in production (not on the basis of raw materials purchased). Its predetermined overhead rate was based on a cost formula that estimated $110,500 of manufacturing overhead for an estimated allocation base of $85,000 direct material dollars to be used in production. The company has provided the following data for the just completed year:         Purchase of raw materials $...
Scanlon Company has a job-order costing system and applies manufacturing overhead cost to products on the...
Scanlon Company has a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The following estimates were used in preparing the predetermined overhead rate for the most recent year: Machine-hours----95,000 Manufacturing overhead cost----$1,710,000 During the most recent year, a severe recession in the company’s industry caused a buildup of inventory in the company’s warehouses. The company’ $ cost records revealed the following actual cost and operating data for the year: Machine-hours----75,000 Manufacturing overhead cost------$1,687,500...
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system...
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $735,000 of total manufacturing overhead for an estimated activity level of 49,000 machine-hours. During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s...
A company which uses a job-costing system, had two jobs in process at the start of...
A company which uses a job-costing system, had two jobs in process at the start of February 2018: Job no. J6 with a cost of $110,000 and job no. F1 with a cost of $22,000. The following information is available: The company applies manufacturing overhead on the basis of machine hours. Budgeted overhead and machine activity for the year were anticipated to be $3,366,000 and 102,000 hours, respectively. The company worked on four jobs during February. Direct materials used, direct...
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system...
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $520,000 of total manufacturing overhead for an estimated activity level of 65,000 machine-hours. During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s...
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system...
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,068,000 of total manufacturing overhead for an estimated activity level of 89,000 machine-hours. During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s...
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system...
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $900,000 of total manufacturing overhead for an estimated activity level of 75,000 machine-hours. During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT