Answer:
Instructions are listed below
Explanation:
Giving the following information:
Estimated:
Overhead $160,000
Direct labor hours 80,000
Han uses normal costing and applies overhead based on direct labor hours.
For January, direct labor hours were 8,150.
By the end of the year, Han showed the following actual amounts:
Overhead $166,000
Direct labor hours 79,600
Assume that the unadjusted Cost of Goods Sold for Han was $176,000.
1) Predetermined overhead rate= total estimated overhead for the period/ total amount of allocation base
Predetermined overhead rate=160000/80000= $2 per hour
2) Applied overhead (January)= Predetermined overhead rate*actual hours= 2*8150= $16,300
3) Applied overhead for the year= 2*79600= $159,200
Over/under applied= actual overhead - applied overhead= 166000 - 159200= 6800 underapplied
4) COGS= 176000
Underapplied overhead= 6800
COGS adjusted= $182,800
