Ask Question
12 June, 17:35

Bramble Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are estimated to total $297,124 for the year, and machine usage is estimated at 125,900 hours. For the year, $377,552 of overhead costs are incurred and 130,700 hours are used.

Compute the manufacturing overhead rate for the year.

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

Prepare the adjusting entry to assign the under - or overapplied overhead for the year to cost of goods sold.

+5
Answers (1)
  1. 12 June, 17:58
    0
    Manufacturing overhead rate is $2.36 per machine hour

    Under applied overhead is $69,100

    Journal Entry

    Dr. Cost of Goods Sold $69,100

    Cr. Manufacturing overhead $69,100

    Explanation:

    Manufacturing overhead rate is calculated by dividing the Estimated overhead with the estimated level of activity on which the overhead is allocated. It is a rate at which the overhead is allocated to a product / project / department.

    Manufacturing overhead rate = Estimated overhead / Estimated activity

    Manufacturing overhead rate = Estimated overhead / Estimated machine hours

    Manufacturing overhead rate = $297,124 / 125,900 machine hours

    Manufacturing overhead rate = $2.36 per machine hour.

    If the applied manufacturing cost is more than the actual cost incurred cost, then overheads are over-applied and If applied overhead cost is less than the actual cost then it is under-applied.

    Applied over head = Manufacturing overhead rate x Actual machine hours = $2.36 x 130,700 = $308,452

    Under applied overhead = Actual Overhead - Applied Overhead = $377,552 - $308,452 = $69,100

    As the actual overhead value is more than the applied, so the overhead is under applied.

    Journal Entry for Under applied overhead.

    Dr. Cost of Goods Sold $69,100

    Cr. Manufacturing overhead $69,100
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Bramble Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are estimated to total $297,124 ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers