Answer:
a) 187,200 applied overhead
b( Overhead T-account
Overhead
Debit Credit
187,200
225,000
37,800
225,000 225,000
Balance: 0
c)
Cost of goods sold 37,800 debit
Factory overhead 37,800 credit
Explanation:
78,000 machine hours x 2.40 dollar per hour = 187,200 applied overhead
incurred overhead: 225,000
applied overhead 187,200
as the actual overhead is above the applied amount we underapplied we need to increase it by the difference:
225,000 - 187,200= 37,800
a) The applied overhead cost for work in process is $187,200.
b) The underapplied overhead is $37,800.
c) The journal entry to close the overapplied overhead cost is attached in the image below.
Computation:
a)
Given,
Machine hours= 78,000 machine hours
predetermined overhead rate= $2.40 per machine hour
[tex]\text{Overhead Cost}=\text{Machine hours}\times\text{Predetermined rate}\\=78,000 \text{Machine hours}\times\$2.40\;\text{per machine hour}\\=187,200\;\text{applied overhead}[/tex]
b) The T-account for the manufacturing overhead is prepared in the image below:
The amount of overhead incurred is $225,000 and the amount of applied overhead is $187,200.
As the actual overhead is more than the applied overhead then the amount of $37,800 is the underapplied overhead that needs to be increased by the company to meet the requirements.
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