2 Applying Overhead; T-accounts; Journal Entries

Harwood Company uses a job-order costing system. Overhead costs are applied to jobs on the basis of machine-hours. At the beginning of the year, management estimated that 80,000 machine-hours would be required for the period's estimated level of production. The company also estimated $128,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $0.80 per machine-hour.

?Required:

?1. Compute the company's predetermined overhead rate.

?2. Assume that during the year the company works only 75,000 machine-hours and incurs the following costs in the Manufacturing Overhead and Work in Process accounts:

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Manufacturing Work in Overhead Process (Maintenance) 21,000 ? (Direct materials) 710,000 (Indirect materials) 8,000 (Direct labor) 90,000 (Indirect labor) 60,000 (Overhead) ? (Utilities) 32,000 (Insurance) 7,000 (Depreciation) 56,000