Harwood Company uses a job-order costing system. Overhead costs
Harwood Company 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 the company would incur $192,000 in manufacturing overhead costs and work 80,000 machine-hours.,Required:,1. Compute the company’s predetermined overhead rate.,2. Assume that during the year the company works only 75,000 machine-hours and incurs the following costs in the Manufacturing Overhead and Work in Process accounts:,Copy the data in the T-accounts above onto your answer sheet. 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.,3. Compute the amount of underapplied or overapplied overhead for the year and show the balance in your Manufacturing Overhead T-account, Prepare a journal entry to close out the balance in this account to Cost of Goods Sold.,4. Explain why the manufacturing overhead was underapplied or overapplied for theyear.