Answer:
a) Budgeted manufacturing overhead rate = budgeted overhead cost / budgeted labor hours
= $ 4,140,000/ 180,000 hrs
= $23 per hour.
b. JOURNAL ENTRY
Debit Work in process $4,347,000 Credit Manufacturing overhead $4,347,000
c. under or over applied = Actual overheads - applied
= $4,337,000 - $4,347,000
Over applied = 10,000
yes the amount of over applied overheads is significant and material enough and it should be written off against cost of sales.
JOURNAL ENTRY
Debit Manufacturing overheads $10,000 , Credit Cost of sales $10,000
Explanation:
allocated manufacturing overheard = $23 * 189000 hrs = $4,347,000
