Exercise 14-5 a-c Bramble Company applies manufacturing overhead to jobs on the

Question

Exercise 14-5 a-c Bramble Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are estimated to total $280,896 for the year, and machine usage is estimated at 125,400 hours. For the year, $400,896 of overhcad costs are incurred and 130,400 hours are used. Your answer is correct. Compute the manufacturing overhead rate for the year. (Round answer to 2 decimal places, e.g. I.25.) Manufacturing overhead rate 2.24 per machine hour Attempts: 1 of 5 used Your answer is correct What is the amount of under- or overapplied overhead at December 31? Manufacturing Overhead S 0880 Attempts: 2 of 5 used Indicate the effect of the adjustment to assign the under- or overapplied overhead for the year to cost of goods sold. The adjustment to assign the underapplied overhead to Cost of Goods Sold will Manufacturing Overhead and Cost of Goods Sold. Attempts: 0 of 5 used

Explanation / Answer

Solution a:

Manufacturing Overhead rate = Estimated manufacturing overhead / Estimated machine hours

= $280896 / 125400= $2.24 per machine hour.

Solution b:

under applied overhead = Actual Overhead - Applied Overhead

= $400896 - ($2.24*130400) = $108,800 underapplied

Solution c:

The adjustment to assign underapplied overhead to Cost of goods sold will decrease manufacturing overhead and increase cost of goods sold.

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