In: Accounting
Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $300,000 for the year, and machine usage is estimated at 125,000 hours. For the year, $322,000 of overhead costs are incurred and 130,000 hours are used. Collapse question part (a) Compute the manufacturing overhead rate for the year. (Round answer to 2 decimal places, e.g. 1.25.) Manufacturing overhead rate $ per machine hour
given data
cverhead costs are expected = $ 300000
machine usage = 125000 hours
overheads cost incurred = $ 322000
machine used = 130000 hours
COMPUTATION OF MANUFACTURING OVERHEAD RATE FOR THE YEAR :
manufacturing overhead rate = overhead cost expected / machine usage
= 300000/125000
= $ 2.40
AMOUNT OF OVERHEADS APPLIED OVER OR UNDER :
amount of overheads applied = overheads cost incurred - (machine used hours *
overhead rate)
= 322000 - (130000 * 2.40)
= 322000 - 312000
+$ 10000
ADJUSTMENT ENTRY :
DATE | PARTICULARS | L/F | DEBIT | CREDIT |
cost of goods sold a/c dr | 10000 | |||
to manufacturing overheads a/c | 10000 | |||
(being manufacturing OH expense transfered to cost of goods sold) |