Exercise 3-17 (30 minutes) 1. The predetermined overhead rate is computed as follows: Y = $106,250 + $0.75 per MH × 85,000 MHs Estimated manufacturing overhead $106,250 Estimated variable manufacturing overhead $0.75 per MH × 85,000 MHs 63,750 Estimated total manufacturing overhead cost $170,000 The predetermined overhead rate is computed as follows: Estimated total manufacturing overhead $170,000 ÷ Estimated total machine-hours 85,000 MHs = Predetermined overhead rate $2.00 per MH 2. The amount of overhead cost applied to Work in Process for the year would be: 80,000 machine-hours × $2.00 per machine-hour = $160,000. This amount is shown in entry (a) below: Manufacturing Overhead (Utilities) 14,000 (a) 160,000 (Insurance) 9,000 (Maintenance) 33,000 (Indirect materials) 7,000 (Indirect labor) 65,000 (Depreciation) 40,000 Balance 8,000 Work in Process (Direct materials) 530,000 (Direct labor) 85,000 (Overhead) (a) 160,000 3. Overhead is underapplied by $8,000 for the year, as in the Manufacturing Overhead account above. The entry to close out this balance to Cost of Goods Sold would be: Cost of Goods Sold 8,000 Manufacturing Overhead 8,000 Exercise 3-17 (continued)
Exercise 3-17 (30 minutes) 1. The predetermined overhead rate is computed as follows: Y = $106,250 + $0.75 per MH × 85,000 MHs Estimated manufacturing overhead $106,250 Estimated variable manufacturing overhead $0.75 per MH × 85,000 MHs 63,750 Estimated total manufacturing overhead cost $170,000 The predetermined overhead rate is computed as follows: Estimated total manufacturing overhead $170,000 ÷ Estimated total machine-hours 85,000 MHs = Predetermined overhead rate $2.00 per MH 2. The amount of overhead cost applied to Work in Process for the year would be: 80,000 machine-hours × $2.00 per machine-hour = $160,000. This amount is shown in entry (a) below: Manufacturing Overhead (Utilities) 14,000 (a) 160,000 (Insurance) 9,000 (Maintenance) 33,000 (Indirect materials) 7,000 (Indirect labor) 65,000 (Depreciation) 40,000 Balance 8,000 Work in Process (Direct materials) 530,000 (Direct labor) 85,000 (Overhead) (a) 160,000 3. Overhead is underapplied by $8,000 for the year, as in the Manufacturing Overhead account above. The entry to close out this balance to Cost of Goods Sold would be: Cost of Goods Sold 8,000 Manufacturing Overhead 8,000 Exercise 3-17 (continued)
14e_gnb_ch03_sm.docx