Answer:
(a) $4 per machine hour
(b) $104,000
Explanation:
(a) Predetermined overhead rate:
= Estimated overhead ÷ Machine hours
= $100,000 ÷ 25,000
= $4 per machine hour
(b) Overhead applied during the year:
= $4 per machine hour × 26,000
= $104,000
(c) Overapplied overhead,
since overhead applied is greater than the actual overhead by [$104,000 - $102,000] $2,000.
The journal is as follows:
Manufacturing overhead A/c Dr. $2,000
To Cost of goods sold A/c $2,000
(Being the Overapplied overhead is recorded)
