The Franklin Manufacturing Company uses a job costing system with machine hours as the allocation base for overhead. The company uses normal costing to develop the overhead allocation rate. The following data are available for the latest accounting period:
Estimated fixed factory overhead cost $160,000
Estimated machine-hours 100,000
Actual fixed factory overhead cost incurred $170,000
Actual machine-hours used 110,000
Jobs worked on:
Job No. Machine Hours Used
1020 12,000
1030 18,000
1040 15,000
1050 10,000
a)Compute the overhead allocation rate.
b)Determine the overhead allocated to job 1040.
c)Determine total over- or underapplied overhead at the end of the year
d)Should cost of goods sold be increased or decreased at the end of the year? Explain.
e)When Franklin incurs an amount of overapplied or underapplied overhead that is quite large (i.e., above 10% of the total allocated cost), how is it assigned?

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The Answer of The Franklin Manufacturing Company uses a job costing system with machine hours as the allocation base for overhead. The company uses normal costing to develop the overhead allocation rate. The following data are available for the latest accounting period:
Estimated fixed factory overhead cost $160,000
Estimated machine-hours 100,000
Actual fixed factory overhead cost incurred $170,000
Actual machine-hours used 110,000
Jobs worked on:
Job No. Machine Hours Used
1020 12,000
1030 18,000
1040 15,000
1050 10,000
a)Compute the overhead allocation rate.
b)Determine the overhead allocated to job 1040.
c)Determine total over- or underapplied overhead at the end of the year
d)Should cost of goods sold be increased or decreased at the end of the year? Explain.
e)When Franklin incurs an amount of overapplied or underapplied overhead that is quite large (i.e., above 10% of the total allocated cost), how is it assigned?

The Franklin Manufacturing Company Uses a Job Costing System with Machine