Question

Washburn Company produces earbuds. During the tear, manufacturing overhead costs are estimated to be $200,000. Estimated machine usage is 2,500 hours. The company assigns overhead based on machine hours. Job No. 551 used 90 machine hours . Compute the predetermined overhead rate, determine the amount of overhead to apply to Job No. 551, and prepare the entry to apply overhead to Job No. 551 on January 15.

Answer 1

Answer:

Results are below.

Explanation:

First, we need to calculate the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate=  200,000 / 2,500

Predetermined manufacturing overhead rate=  $80 per machine hour

Now, we can allocate overhead to Job 551:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 80*90

Allocated MOH= $7,200

Finally, the entry to record the allocation:

Work in process inventory        7,200

       Manufacturing overhead (apply Job 551)  7,200