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25 March, 12:47

Cambridge Manufacturing Company applies manufacturing overhead on the basis of machine hours. At the beginning of the year, the company estimated its total overhead cost to be $294,000 and machine hours to be 14,700. Actual manufacturing overhead and machine hours were $337,000 and 15,700, respectively. Required: 1. & 2. Prepare the journal entries for actual and applied manufacturing overhead and transfer of manufacturing overhead account balance to cost of goods sold. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

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  1. 25 March, 15:55
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    The journal entries are as follows

    1. Manufacturing overhead Dr $337,000

    To Account payable $337,000

    (Being the actual manufacturing overhead is recorded)

    2. Work in process inventory Dr $314,000

    To Manufacturing overhead $314,000

    (Being the applied manufacturing overhead is recorded)

    The computation is shown below:

    = $294,000 : 14,700 machine hours * 15,700 machine hours

    = $314,000

    3. Cost of goods sold Dr $23,000 ($337,000 - $314,000)

    To Manufacturing overhead $23,000

    (Being the under applied overhead is recorded)
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