Question

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Hamilton company applies manufacturing overhead costs to product based on direct labor hours. the company estimates...

Hamilton company applies manufacturing overhead costs to product based on direct labor hours. the company estimates manufacturing overhead cots for the year to be 280000 and direct labor hours to be 20000. actual overhead and actual direct labor hours for the year were 335000 and 25000 hour respectively

required

1. compute over or underapplied overhead

2a. which accounts will be affected by the over- or underapplied manufacturing overhead ?

2b. will the accounts be increased or decreased to abjust for the over- or underapplied manufacturing overhead ?

Solutions

Expert Solution

Estimated manufacturing overhead 280000
Divide by Estimated direct labor hours 20000
Predetermined overhead rate 14
1
Applied manufacturing overhead 350000 =25000*14
Less: Actual overhead 335000
Overapplied overhead 15000
2a
Cost of Goods Sold and Manufacturing Overhead are affected.
2b
Cost of Goods Sold decreased by 15000
Manufacturing Overhead increased by 15000

ekkarill92 answered 2 years ago
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