Exercise 4-31 Cost Flows; Applying Overhead [LO 4-3, 4-4, 4-5) *** Erkens Company uses a job costing system with normal costing and applies factory overhead on the basis of machine hours. At the beginning of the year, management estimated that the company would incur $1,750,000 of factory overhead costs and use 70,000 machine hours. Erkens Company recorded the following events during the month of April: a. Purchased 202,000 pounds of materials on account; the cost was $4.50 per pound. b. Issued 131,000 pounds of materials to production, of which 20,500 pounds were used as indirect materials. c. Incurred direct labor costs of $295,000 and $51,000 of indirect labor costs. d. Recorded depreciation on equipment for the month, $77,900. e. Recorded expired insurance costs for the manufacturing property, $4,600. f. Paid $9,600 cash for utilities and other miscellaneous items for the manufacturing plant. g. Completed Job H11 costing $8,600 and Job G28 costing $82,500 during the month and transferred them to the Finished goods inventory account. h. Shipped Job G28 to the customer during the month. The job was invoiced at 35% above cost. i. Used 9,900 machine hours during April. Required: 1. Compute Erkens Company's predetermined overhead rate for the year. 2. Prepare journal entries to record the events that occurred during April. 3-a. Compute the amount of overapplied or underapplied overhead. 3-b. Prepare a journal entry to close overapplied or underapplied overhead into cost of goods sold on April 30. Complete this question by entering your answers in the tabs below. Req 1 Reg 1 Req 2 Req 3a Reg 38 Compute Erkens Company's predetermined overhead rate for the year. Predetermined overhead rate per machine hour Req 1 Req 2 > Reg 1 Reg 2 Req Req 3B Prepare journal entries to record the events that occurred during April. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 2 3 4 5 6 7 8 9 10 Purchased 202,000 pounds of materials on account; the cost was $4.50 per pound. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal Reg 1 Reg 2 Req Req 3B Compute the amount of overapplied or underapplied overhead. overhead Reg 1 Reg 2 Req Reg 3B Prepare a journal entry to close overapplied or underapplied overhead into cost of goods sold on April 30. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the entry to close the overhead account. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal
