Harwood Company uses a Job-order costing system that applies overhead cost to jobs on the basis of machine-hours. The company's predetermined overhead rate of $260 per machine-hour was based on a cost formula that estimates $260,00 of total manufacturing overhead for an estimated activity level of 100,000 machine-hours. Required: 1. Assume that during the year the company works only 95.000 machine-hours and incurs the following costs in the Manufacturing Overhead and Work In Process accounts: Compute the amount of overhead cost that would be applied to Work In Process for the year and make the entry in your T-accounts. 2A Compute the amount of underapplied or overapplied overhead for the year and show the balance in your Manufacturing Overhead T-account 28. Prepare a Joumal entry to close the company's underapplied or overapplied overhead to Cost of Goods Sold.
Harwood Company uses a Job-order costing system that applies overhead cost to jobs on the basis of machine-hours. The company's predetermined overhead rate of $260 per machine-hour was based on a cost formula that estimates $260,00 of total manufacturing overhead for an estimated activity level of 100,000 machine-hours. Required: 1. Assume that during the year the company works only 95.000 machine-hours and incurs the following costs in the Manufacturing Overhead and Work In Process accounts: Compute the amount of overhead cost that would be applied to Work In Process for the year and make the entry in your T-accounts. 2A Compute the amount of underapplied or overapplied overhead for the year and show the balance in your Manufacturing Overhead T-account 28. Prepare a Joumal entry to close the company's underapplied or overapplied overhead to Cost of Goods Sold.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 30P: Primera Company produces two products and uses a predetermined overhead rate to apply overhead....
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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