Answer:
A. $2.40 per Machine hour
B. Underapplied = $10,000
C. cost of goods sold (debit) $10,000 , overheads (credit) $10,000
Explanation:
A) Compute the manufacturing overhead rate for the year
Overhead Rate = Total Fixed Overheads / Budgeted Activity
= $300,000 / 125,000 Machine hours
= $2.40 per Machine hour.
B) What is the amount of under- or over applied overhead at December 31st?
Under Applied Overheads = Actual Overheads > Applied Overheads
Over Applied Overheads = Actual Overheads < Applied Overheads
Actual Overheads = $322,000
Applied Overheads = $2.40 × 130,000 hours = $ 312,000
Underapplied = $10,000
C) Prepare the adjusting entry to assign the under- or overapplied overhead for the year to cost of goods sold.
cost of goods sold (debit) $10,000
overheads (credit) $10,000
