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 97,000 machine-hours would be required for the period's estimated level of production. The company also estimated $155,200 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $0.90 per machine-hour Required: 1. Compute the company's predetermined overhead rate (Round your answer to 2 decimal places) Predetermined overhead rate per MH 2 Assume that during the year the company works only 92.000 machine-hours and incurs the following s 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 ent below (Round your intermediate calculations to 2 decimal places.) (Maintenance) (Indirect materials) (Indirect labor) (Utilities) Manufacturing Overhead 38.000 9,700 70,000 44 000 8 700 62.000 Direct materials Direct labor Overhead) nsurance) Depreciation)

Explanation / Answer

1) Predetermine overhead rate = (155200/97000)+0.90 = 2.50 per machine hour

2) Manufacturing overhead account :

Manufacturing overhead Maintenance 38000 Indirect materials 9700 Work in process (92000*2.50) 230000 Indirect labour 70000 Utilities 44000 Insurance 8700 Depreciation 62000 Total 232400 Under applied overhad 2400

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