Question

Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are estimated to total $283,725 for the year, and machine usage is estimated at 126,100 hours.

For the year, $303,850 of overhead costs are incurred and 130,200 hours are used.

Compute the manufacturing overhead rate for the year. (Round answer to 2 decimal places, e.g. 1.25.)

Manufacturing overhead rate

$

per machine hour

What is the amount of under- or overapplied overhead at December 31?

Manufacturing Overhead

$ Overapplied/Underapplied

Prepare the adjusting entry to assign the under- or overapplied overhead for the year to cost of goods sold. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit

Answer 1

Estimated manufacturing overhead cost	$     283,725
Estimated machine hours	126,100
Manufacturing overhead cost per hour	283725/126100
Manufacturing overhead cost per hour	$           2.25
Actual machine hours used	130,200
Overhead costs applied	130200*2.25
Overhead costs applied	$     292,950
Actual overhead costs	$     303,850
Overhead costs applied	$    (292,950)
Underapplied overhead cost	$       10,900
Cost of goods sold                  Dr	$       10,900
To Manufacturing overhead		$ 10,900
(being underapplied overhead cost closed to COGS)