Beautiful Bottles Pty Ltd, bottle manufacturer for the food industry, has just installed a job order costing system. The company uses machine hours to apply its overhead to work in process. On 1 May 2025, management estimated that the company would incur $680 000 in manufacturing overhead costs and 64 000 machine hours for the coming year.

Required

(a) Calculate the predetermined overhead rate. Assume that Beautiful Bottles Pty Ltd uses only 61 000 machine hours and incurs the following costs:

(b) Calculate any under- or over-applied overhead.

(c) Prepare the journal entry to write off any under- or over-applied overhead against cost of goods sold.

Transcribed Image Text:

Maintenance Depreciation Indirect materials Utilities Insurance $ 64.000 210 000 84 000 172 000 92 000