Question

Question 2 Not yet answered Blue Ltd manufactured 10,000 iPhone cases during March. The following fixed overhead data pertain to March: Marked out of 100 Flag question Actual Budget Production 10,000 units 12,000 units Machine-hours 5,100 hours 6,000 hours Fixed overhead cost for March $122,000 $120,000 What is the correct journal entry to dispose of under or over applied overhead, treat as immaterial: Select one: a. DR COGS 20,000 CR OH Control 20,000 O b. DR OH Control 20,000 CR COGS 20,000 O c. DR WIP 102,000 CR OH control 102,000 O d. DR OH Control 2,000 CR COGS 2,000 O e. DR COGS 2,000 CR COGS 2,000

Answer 1

Solution: 20 Per MH Overhead rate=Estimated overhead/Estimated MH 120000/6000 5100 20 Actual MH X Overhead rate Overhead head applied Actual overhead Underapplied overhead=122000-102000 102000 122000 20000 Credit when under/ over applied overhead is treated to be immaterial then the amount is adjusted to cost of goods sold acccount. Hence correct entry is : Account title COGS OH Control Option a is correct. Debit 20000 20000