Reference no: EM132517641

Erkens Company uses a job costing system with normal costing and applies factory overhead on the basis of machine hours. At the beginning of the year, management estimated that the company would incur $1,952,000 of factory overhead costs and use 61,000 machine hours.

Erkens Company recorded the following events during the month of April:

1. Purchased 216,000 pounds of materials on account; the cost was $5.20 per pound.
2. Issued 138,000 pounds of materials to production, of which 24,000 pounds were used as indirect materials.
3. Incurred direct labor costs of $330,000 and $58,000 of indirect labor costs.
4. Recorded depreciation on equipment for the month, $79,300.
5. Recorded expired insurance costs for the manufacturing property, $5,300.
6. Paid $10,300 cash for utilities and other miscellaneous items for the manufacturing plant.
7. Completed Job H11 costing $9,300 and Job G28 costing $86,000 during the month and transferred them to the Finished goods inventory account.
8. Shipped Job G28 to the customer during the month. The job was invoiced at 40% above cost.
9. Used 11,300 machine hours during April.

Required:

Question 1. Compute Erkens Company's predetermined overhead rate for the year.

Question 2. Prepare journal entries to record the events that occurred during April.

Question 3-a. Compute the amount of overapplied or underapplied overhead.

Question 3-b. Prepare journal entry to close overapplied or underapplied overhead into cost of goods sold on April 30.