Reference no: EM132560452

Question - Horton Company uses a job costing system, and manufacturing overhead is applied on the basis of machine hours. At the beginning of the year, management estimated that the company would incur $1,050,000 of manufacturing overhead costs and use 70,000 machine hours.

Horton Company recorded the following events during the month of March.

(i) Purchased 200,000 kilograms of raw materials on account. The cost was $4.00 per kilogram.

(ii) Issued 150,000 kilograms of materials to production. Assume all materials issued are at $4 per kilogram.

(iii) Incurred $250,000 of direct labour costs and $50,000 of indirect labour costs.

(iv) Recorded depreciation on equipment for the month, $18,000.

(v) Recorded $42,000 of insurance costs for the manufacturing property.

(vi) Recorded $35,000 for utilities and other miscellaneous items for the manufacturing plant.

(vii) Completed job M11 costing $170,000 and job M12 costing $800,000 during the month.

(viii) Shipped job M12 to the customer during the month.

(ix) Used 10,000 machine hours during March.

Required -

i) Complete the T accounts providing the amounts of a) to r) to show the flow of costs through the company's manufacturing accounts. (NB: No entry is required to close the amount of over/under applied overhead in this part of the question)

ii) Was manufacturing overhead under/over applied during January and by how much?