Exercise 15-5 kerd Company applies manufacturing overhead to jobs on the basis o

Question

Exercise 15-5 kerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $292,552 for the year, and machine usage is estimated at 126,100 hours. For the year, $413,432 of overhead costs are incurred and 130,100 hours are used. Compute the manufacturing overhead rate for the year. (Round answer to 2 decimal places, e.g. 1.52.) Manufacturing overhead rate per machine hour SHOW LIST OF ACCOUNTS What is the amount of under- or overapplied overhead at December 31? Manufacturing Overheads SHOW LIST OF ACCOUNTS Prepare the adjusting entry to assign the under- or overapplied overhead for the year to cost of goods sold. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit

Explanation / Answer

1. Manufacturing overhead rate = 292552/126100 = 2.32 per machine hour

2. Calculate under or over applied overhead :

Applied overhead = 2.32*130100 = 301832

Actual overhead = 413432

Under applied overhead = 413432-301832 = 111600

3. Adjusting entry :

Date accounts & explanation debit credit Cost of goods sold a/c 111600 Manufacturing overhead 111600 (To record underapplied overhead)

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