E2-5 Duggan Company applies manufacturing overhead to jobs on the basis of machine hours used.

E2-5 Duggan Company applies manufacturing overhead to jobs on the basis of machine hours used.

Overhead costs are expected to total

$325,000

for the year, and machine usage is estimated at

125,000

hours.

For the year

$342,000

of overhead costs are incurred and

130,000

machine hours are

used.

Instructions:

(a) Compute the manufacturing overhead rate for the year.

(b) What is the amount of under- or overapplied overhead at December 31?

(c) Assuming the under- or overapplied overhead for the year is not allocated to inventory accounts, prepare the adjusting entry to assign the amount to cost of goods sold.

11 years ago

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E2-5 Duggan Company applies manufacturing overhead to jobs on the basis of machine hours used.

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e2-5_duggan.xls