Harwood Company uses a job-order costing system. Overhead costs are applied to j

Question

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 81,000 machine-hours would be required for the period's estimated level of production. The company also estimated $145,800 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $0.70 pe machine-hour Required: 1. Compute the company's predetermined overhead rate. (Round your answer to 2 decimal places.) redetermined overhead rate 250j per MH

Explanation / Answer

1. Predetermined overhead rate =

(Estimated total manufacturing overhead cost) / (Estimated total amount of allocation base )

= ($145,800 + $0.7 * 81000 ) / 81000 machine hours

=$202500 / 81000 hours

=$2.5 per machine hour

2. If company works only for 76000 machine hours, the amount of overhead cost that would be applied to work in process = 76000 hours * $2.5 = $190,000

Manufacturing overhead T account DEBIT CREDIT Maintenance 22000 190000 Indirect materials 8100 Indirect labour 65000 Utilities 35000 Insurance 7100 Depreciation 57000 Balance 4200

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.