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 $2.30 per machine-hour was based on a cost formula that estimates $225,400 of total manufacturing overhead for an estimated activity level of 98,000 machine-hours.

Required:

1. Assume that during the year the company works only 93,000 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

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)	39,000		(a)		(Direct materials)	890,000
(Indirect materials)	9,800				(Direct labor)	108,000
(Indirect labor)	60,000				(Overhead) (a)
(Utilities)	45,000
(Insurance)	8,800
(Depreciation)	55,000
Balance

• Req 2A

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

• Req 2B

Prepare a journal entry to close the company's underapplied or overapplied overhead to Cost of Goods Sold. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)