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 $2.50 per machine-hour was based on a cost formula that estimates $237,500 of total manufacturing overhead for an estimated activity level of 95,000 machine-hours.

Required:

1. Assume that during the year the company works only 90,000 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.

• Req 1
• Req 2A
• Req 2B

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					Work in Process
(Maintenance)	36,000		(a)		(Direct materials)	860,000
(Indirect materials)	9,500				(Direct labor)	105,000
(Indirect labor)	75,000				(Overhead) (a)
(Utilities)	44,000
(Insurance)	8,500
(Depreciation)	56,000
Balance

• Req 1
• Req 2A
• Req 2B

Compute the amount of underapplied or overapplied overhead for the year and show the balance in your Manufacturing Overhead T-account from Req 1.

manufacturing overhead

• Journal entry worksheet

• Record the entry to close the balance of the manufacturing overhead account to COGS account.

Note: Enter debits before credits.

Event	General Journal	Debit	Credit
1