Compute the amount of underapplied overhead

Assignment Help Accounting Basics

Reference no: EM132212279

Question: Applying Overhead; T-accounts; Journal Entries [LO3-1, LO3-2, LO3-4]

Harwood Company uses a job-order costing system that applies overhead cost to jobs on the basis of machine-hours. The company's predetermined overhead rate of $2.60 per machine-hour was based on a cost formula that estimates $228,800 of total manufacturing overhead for an estimated activity level of 88,000 machine-hours.

Required:

1. Assume that during the year the company works only 83,000 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.

2A. Compute the amount of underapplied or overapplied overhead for the year and show the balance in your Manufacturing Overhead T-account.

2B. Prepare a journal entry to close the company's underapplied or overapplied overhead to Cost of Goods Sold.

Reference no: EM132212279

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