Question

A review of the records of Protix, Inc., a new company, disclosed the following year-end information:

• Manufacturing Overhead account: Contained debits of $884,000, which included $26,000 of sales commissions.
• Work-in-Process Inventory account: Contained charges for overhead of $893,000.
• Cost-of-Goods-Sold account: Contained a year-end debit balance of $3,710,000. This amount was computed prior to any year-end adjustment for under- or overapplied overhead. Pilgrim applies manufacturing overhead to production by using a predetermined rate of $20 per machine hour. Budgeted overhead for the period was anticipated to be $930,000.

Required:

1. Determine the actual manufacturing overhead for the year.

Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F Determine the actual manufacturing overhead for the year. Actual manufacturing overhead

2. Determine the amount of manufacturing overhead applied to production.

3. Is overhead under- or overapplied? By how much?

4. Compute the adjusted cost-of-goods-sold figure that should be disclosed on the company's income statement.

5. How many machine hours did Protix actually work during the year?

6. Compute budgeted machine hours for the year.

Answer 1

a) Actual manufacturing overhead = 884000-26000 = 858000

b) Applied manufacturing overhead = 893000

c) Overhead in under applied by (893000-858000) = 35000

d) Adjusted cost of goods sold = Unadjusted cost of goods sold+Under applied overhead = 3710000+35000 = $3745000

e) Actual machine hour = 893000/20 = 44650 Hour

f) Budgeted machine hour = 930000/20 = 46500 Hour