Medusa Products uses a job-order costing system. Overhead costs are applied to jobs on the basis of machine-hours. At the beginning of the year, management estimated that 86,000 machine-hours would be required for the period's estimated level of production. The company also estimated $163,400 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $0.75 per machine-hour.
Required:
1. Compute the company's predetermined overhead rate. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
2. Assume that during the year the company actually works only 62,900 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 given below: (Round your intermediate calculations to 2 decimal places. Omit the "$" sign in your response.)
Manufacturing Overhead
(Utilities) 19,000
(Insurance) 11,000
(Maintenance) 39,000
(Indirect materials) 9,000
(Indirect labor) 68,000
(Depreciation) 45,000
Balance
Work in Process
(Direct materials) 531,000
(Direct labor) 86,000
(Overhead)
3-a. Compute the amount of underapplied or overapplied overhead for the year, and show the balance in your manufacturing overhead T-account. (Input the amount as a positive value. Round your intermediate calculations to 2 decimal places. Omit the "$" sign in your response.)
manufacturing overhead $
3-b. Prepare a journal entry to close out the balance in this account to cost of goods sold. (Round your intermediate calculations to 2 decimal places. Omit the "$" sign in your response.)