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 $2.70 per machine-hour was based on a cost formula that estimates $243,000 of total manufacturing overhead for an estimated activity level of 90,000 machine-hours. Required: 1. Assume that during the year the company works only 85,000 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. Complete this question by entering your answers in the tabs below. Req 1 Req 2A 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. Manufacturing Overhead Debit (Maintenance) (Indirect materials) (Indirect labor) (Utilities) (Insurance) Monrorintion) Req 2B 31,000 9,000 82,000 37,000 8,000 Fenn Credit (a) (Direct materials) (Direct labor) (Overhead) (a) Debit Work in Process 810,000 100,000 Credit
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 $2.70 per machine-hour was based on a cost formula that estimates $243,000 of total manufacturing overhead for an estimated activity level of 90,000 machine-hours. Required: 1. Assume that during the year the company works only 85,000 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. Complete this question by entering your answers in the tabs below. Req 1 Req 2A 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. Manufacturing Overhead Debit (Maintenance) (Indirect materials) (Indirect labor) (Utilities) (Insurance) Monrorintion) Req 2B 31,000 9,000 82,000 37,000 8,000 Fenn Credit (a) (Direct materials) (Direct labor) (Overhead) (a) Debit Work in Process 810,000 100,000 Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text: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 $2.70 per machine-hour was based on a cost formula that estimates $243,000 of total manufacturing
overhead for an estimated activity level of 90,000 machine-hours.
Required:
1. Assume that during the year the company works only 85,000 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.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2A
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.
Manufacturing Overhead
Debit
(Maintenance)
(Indirect materials)
(Indirect labor)
(Utilities)
(Insurance)
Depreciation)
Req 2B
31,000
9,000
82,000
37,000
8,000
66.000
Credit
(a)
(Direct materials)
(Direct labor)
(Overhead) (a)
Debit
Work in Process
810,000
100,000
Credit
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