Practice Problems Chapter 3

Practice Problems Chapter 3 - Exercise 3-14(20 minutes 1...

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Exercise 3-14 (20 minutes) 1. The estimated total manufacturing overhead cost is computed as follows: Y = $650,000 + ($3.00 per MH)(100,000 MHs) Estimated fixed manufacturing overhead ......... $650,000 Estimated variable manufacturing overhead: $3.00 per MH × 100,000 MHs ......................... 300,000 Estimated total manufacturing overhead cost. . $950,000 The predetermined overhead rate is computed as follows: Estimated total manufacturing overhead ............................................. $950,000 ÷ Estimated total machine-hours (MHs) ................................................... 100,000 MHs = Predetermined overhead rate ............. $9.50 per MH 2. Total manufacturing cost assigned to Job 400: Direct materials ................................................ $ 450 Direct labor ....................................................... 210 Manufacturing overhead applied ($9.50 per MH × 40 MHs) ................................................ 380 Total manufacturing cost ................................... $1,040 3. Computing underapplied/overapplied overhead: Actual manufacturing overhead (a) ................................................... $1,350,00 0 Actual machine-hours ........................ 146,000 × Predetermined overhead rate ........ $9.50 = Manufacturing overhead applied (b) ................................................... $1,387,00 0 Overapplied overhead (a) – (b) .......... $ (37,00 0)
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The closing entry would decrease cost of goods sold by $37,000 and increase net operating income by $37,000.
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