Harwood Company uses a job-order costing system that applies overhead cost to jo

Question

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 $254,800 of total manufacturing overhead for an estimated activity level of 91,000 machine-hours.

Required:

1. Assume that during the year the company works only 86,000 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.

Compute the amount of underapplied or overapplied overhead for the year and show the balance in your Manufacturing Overhead T-account from Req 1.

Journal entry worksheet

Record the entry to close the balance of the manufacturing overhead account to COGS account.

Note: Enter debits before credits.

Explanation / Answer

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.

Applied overhead = 240800-244200 = 3400 Under applied

Journal entry :

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