Chapter 3, Problem 9E

Applying Overhead; T-Accounts; Journal Entries 103-1, 103-2, L03-4

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 $2.40 per machine-hour based on a cost formula that estimates $192,000 of total manufacturing Overhead for an estimated activity of 80,000 machine-hours.
Required:
1. Assume that during the year the company works 75,000 machine-hours and incurs the following costs in the Manufacturing Overhead and Work in Process accounts:

Copy the data in the T-accounts above onto your answer sheet Compute the amount of Overhead cost tint would be applied to Work inProcess for the year and make the entry in your T-accounts.
2. Compute the amount of underapplied or overapplied Overhead for the year and show the balance in your Manufacturing Overhead T- account Prepare a journal entry to close the company's underapplied or overapplied Overhead to Cost of Goods Sold.
3. Explain the manufacturing Overhead was underapplied or over-applied for the year.