Harwood Company uses a job-order costing system. Overhead costs are applied to j

Question

Harwood Company uses a job-order costing system. Overhead costs are applied to jobs on the basis of machine-hours. At the beginning of the year, management estimated that 80,000 machine-hours would be required for the period's estimated level of production. The company also estimated $128,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $0.80 per machine-hour Required 1. Compute the company's predetermined overhead rate. (Round your answer to 2 decimal places.) rate S 2.40 per MH 2. 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 given below: (Round your intermediate calculations to 2 decimal places.) ad Work in Process (Maintenance) (Indirect materials) (Indirect labor) Direct materials) Direct labor 21,000 8,000 60,000 32,000 7,000 56,000 4,000 710,000 90,000 180,000 Utilities) Insurance) Balance 3-a. Compute the amount of underapplied or overapplied overhead for the year. (Round your intermediate calculations to 2 decimal places.) Underapplied 4,000

Explanation / Answer

Journal entry :

Date account & explanation debit credit Cost of goods sold 4000 Manufacturing overhead 4000 (To record under applied)

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