Duggan Company applies manufacturing overhead to jobs on the basis of machine ho

Question

Duggan Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $292,100 for the year, and machine usage is estimated at 127,000 hours. For the year, $309,674 of overhead costs are incurred and 132,700 hours are used. Compute the manufacturing overhead rate for the year. What is the amount of under- or overapplied overhead at December 31? prepare the adjusting entry to assign the under- or overapplied overhead for the year to cost of goods sold. By accessing this question assistance, you will learn while you earn points based on the point potential policy set by your instructor.

Explanation / Answer

1)

Manufacturing Overhead rate = Estimated Manufacturing Overhead/Estimated Machine Hour

Manufacturing Overhead rate = 292100/127000

Manufacturing Overhead rate = $ 2.30 per machine hour

2)

Manufacturing Overhead applied = Manufacturing Overhead rate* No of Machine hour used

Manufacturing Overhead applied = 2.30*132700

Manufacturing Overhead applied = 305210

Actual Manufacturing Overhead = 309674

Under Applied Manufacturing Overhead = Actual Manufacturing Overhead - Manufacturing Overhead applied

Under Applied Manufacturing Overhead = 309674 - 305210

Under Applied Manufacturing Overhead = $ 4464

3)

Account Title & Explaination Debit Credit Cost of Good Sold 4464 Manufacturing Overhead 4464

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