Problem 3 (30 pts) Estimated manufacturing overhead Estimated machine hours Actu

Question

Problem 3 (30 pts) Estimated manufacturing overhead Estimated machine hours Actual machine hours worked $690,000 46,000 50,000 Actual overhead costs incurred: Indirect materials Indirect labor Utilities Insurance Factory Rent $170,000 230,000 120,000 100,000 120,000 The company uses a predetermined overhead rate to apply overhead based on machine hours. What is the predetermined manufacturing application rate per machine hour? By how much? If this rate is used is manufacturing overhead over or under applied? Ir the over or under application is c for the over or under application? t be material in size what is the journmal entry to correet

Explanation / Answer

Entry to correct overapplied overhead is:

[Entry to rectify overhead over applied amount]

Note:

When manufacturing overhead is overapplied, manufacturing overhead account will show a credit balance. After passing a debit in manufacturing overhead account, it becomes nil.

A Pre-determined overhead rate Overhead recovery rate = Estimated Total overhead/ Estimated Machine hours =690000/46000                                                   15 Per Machine hour

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