Ikerd Company applies manufacturing overhead to jobs on the basis of machine hou

Question

Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $294,138 for the year, and machine usage is estimated at 125,700 hours. For the year, $419,736 of overhead costs are incurred and 130,400 hours are used. Compute the manufacturing overhead rate for the year. (Round answer to 2 decimal places, eg. 1.52) Manufacturing overhead rate per machine hour List of Accounts What is the amount of under-or overapplied overhead at December 31? Manufacturing Overhead

Explanation / Answer

Calculation of Manufacturing overhead rate = overhead cost/estimated machine hours                                                                                         = 294138/125700                                                                                         = 2.34 calculation of under or overapplied overhead Applied overhead =    2.34*130400 = 305136 actual overhead =   419736 under applied overhead = 419736-305136                                                   = 114600 particulars Debit Credit cost of goods sold a/c debit 114600 to manufacturing overhead 114600 ( being under applied overhead recorded)

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