hardwood company uses a job order costing system that appliesoverhead cost to jobs on the basis of machine hours. The companyspredetermined overhead rate of $2.50 Per machine hour was based onthe cost formula that estimates $237,500 of total manufacturingoverhead for an estimated activity level of 95,000 machinehours.
1.
Manufacturing Overhead
Maintenance 36,000 ??? (a)
IndirectMaterials 9,500
IndirectLabor 75,000
Utilities 44,000
Insurance 8,500
Depreciation 56,000
Balance: ???
Work in Process:
DirectMaterials 860,000
DirectLabor 105,000
Overhead(a) ????
Required:
1. Assume that during the year the company works only 90,000machine hours and incurs the following costs in the manufacturingoverhead and work in process accounts: compute the amount ofoverhead cost that would be applied to work in process for the yearand make the entry in your T accounts.
2a. Compute the amount of under applied or overapplied overheadfor the year and show the balance in your manufacturing overhead Taccount.
2b. Prepare a journal entry to close the companies under appliedor overapplied overhead cost of goods sold.
