Reference no: EM132548641
EYhens Corporation uses a job-cost system and applies manufacturing overhead to products on the basis of machine hours. The company's accountant estimated that overhead and machine hours would total $800,000 and 50,000, respectively, for 20x1. Actual costs incurred follow.
Direct material used $250,000
Direct labor 300,000
Manufacturing overhead 816,000
An examination of job-cost records revealed that 18 jobs were sold during the year at a total cost of $2,960,000. These goods were sold to customers for $3,720,000.
Actual machine hours worked totaled 51,500, and the company adjusts under- or overapplied overhead at year-end to Cost of Goods Sold.
Required:
Question 1: Determine the company's predetermined overhead application rate.
Question 2: Determine the amount of under- or overapplied overhead at year-end (variance) . Show the adjusting entry and be sure to indicate whether overhead was under- or overapplied.
Question 3: Show the ledger of the WIP account