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Duggan company applies

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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 hours are used.

(a) Compute the manufacturing overhead rate for the year.
(b) What is the amount of under- or overapplied overhead at December 31?
(c) Prepare the adjusting entry to assign the under- or overapplied overhead for the year
to cost of goods sold.

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