Belhaven Company produces “collapse-proof” rod and reel cases. In preparing the current budget, Belhaven’s controller estimates a total of $400,000 in direct materials cost, $300,000 in direct labor cost, and $300,000 in manufacturing overhead costs. Since the manufacturing process is highly automated, the company uses machine hours as the overhead application base. Estimated machine hours total 12,000. At the end of the period, Belhaven reported actual results as follows: direct materials cost of $410,000, direct labor cost of $250,000, manufacturing overhead cost $310,000, and machine hours used 12,500.

Required:
a. What was Belhaven’s predetermined overhead rate for the year?
b. How much manufacturing overhead did Belhaven apply to jobs during the year?
c. If over-/under-applied overhead is closed to cost of goods sold, what is the balance in the Manufacturing Overhead account after the adjustment?

Question

Required:
a.	What was Belhaven’s predetermined overhead rate for the year?
b.	How much manufacturing overhead did Belhaven apply to jobs during the year?
c.	If over-/under-applied overhead is closed to cost of goods sold, what is the balance in the Manufacturing Overhead account after the adjustment?

Quizplus · Accepted Answer

The Answer of Belhaven Company produces “collapse-proof” rod and reel cases. In preparing the current budget, Belhaven’s controller estimates a total of $400,000 in direct materials cost, $300,000 in direct labor cost, and $300,000 in manufacturing overhead costs. Since the manufacturing process is highly automated, the company uses machine hours as the overhead application base. Estimated machine hours total 12,000. At the end of the period, Belhaven reported actual results as follows:  direct materials cost of $410,000, direct labor cost of $250,000, manufacturing overhead cost $310,000, and machine hours used 12,500.

Required:
a.	What was Belhaven’s predetermined overhead rate for the year?
b.	How much manufacturing overhead did Belhaven apply to jobs during the year?
c.	If over-/under-applied overhead is closed to cost of goods sold, what is the balance in the Manufacturing Overhead account after the adjustment?

Belhaven Company Produces “Collapse-Proof” Rod and Reel Cases