Answer:
a. $2.4
b. $10,000 under-applied
c. Cost of goods sold A/c Dr $10,000
To Manufacturing overhead $10,000
Explanation:
a. The computation of the manufacturing overhead rate is shown below:
Manufacturing overhead rate = (Total estimated manufacturing overhead) ÷ (estimated direct labor-hours)
= $300,000 ÷ 125,000 hours
= $2.4
(B) Now we have to find the actual overhead which equals to
= Actual direct labor-hours × predetermined overhead rate
= 130,000 hours × $2.4
= $312,000
So, the ending overhead equals to
= Actual manufacturing overhead - actual overhead
= $322,000 - $312,000
= $10,000 under-applied
c. The adjusting entry is shown below:
Cost of goods sold A/c Dr $10,000
To Manufacturing overhead $10,000
(Being the under-applied overhead is adjusted)
