Question

Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are estimated to total $347,325 for the year, and machine usage is estimated at 126,300 hours.For the year, $375,125 of overhead costs are incurred and 132,700 hours are used.

Required:1. Compute the manufacturing overhead rate for the year. (Round answer to 2 decimal places, e.g. 1.25.)2. What is the amount of under- or overapplied overhead at December 31?3. Prepare the adjusting entry to assign the under- or overapplied overhead for the year to cost of goods sold.

Answer 1

See below

Step-by-step explanation:

1. Manufacturing overhead rate

= Total estimated manufacturing overhead ÷ Estimated direct labor hour

= $347,325 ÷ 126,300

= $2.75

2. $132,700 × 2.75 = $364,925