Question

Problem 1 Consider the following data: Cost of goods sold $70 Direct labor $20 Direct materials used $15 Cost of goods manufactured $80 Work in process ending $10 Finished goods ending $15 Actual overhead $35 OH applied at 150% of DL$. a) Prepare a schedule of COGM & Sold using OH applied. b) Prepare the journal entry to close OH.

Answer 1

Solution a:

Schedule of cost of goods manufactured & Sold
Particulars	Amount
Direct materials used	$15.00
Direct labor	$20.00
Factory overhead Applied (150% of DL Cost)	$30.00
Total manufacturing costs	$65.00
Add: Beginning WIP	$25.00
Total cost of work in process	$90.00
Less: Ending WIP	$10.00
Cost of goods manufactured	$80.00
Add: Beginning finished goods inventory	$5.00
Cost of goods available for sale	$85.00
Less: Ending finished goods inventory	$15.00
Cost of goods sold	$70.00

Solution b:

Journal Entries
Event	Particulars	Debit	Credit
1	Cost of goods sold Dr	$5.00
	To Manufacturing overhead		$5.00
	(To close underapplied overhead)