Question

Question 1 Vaughn Guitar Company makes high-quality customized guitars. Vaughn uses a job order costing system. Because the guitars are handmade, the company applies overhead based on direct labor hours. At the beginning of the year, the company estimated that total manufacturing overhead costs would be $331,200 and that 20,700 direct labor hours would be worked. At year-end, Anthony, the company's founder and CEO, gives you the following information regarding Vaughn's operations. 1. The beginning balances in the inventory accounts were: Raw Materials Inventory $7,800 Work in Process Inventory $25,600 Finished Goods Inventory $31,800 2. During the year, the company purchased raw materials costing $104,000. All purchases were made on account. 3. The production department requisitioned $102,000 of raw materials for use in production. Of those, 70% were direct materials and 30% were indirect materials. 4. The company used 20,000 direct labor hours at a cost of $14 per hour during the year (credit Wages Payable). 5. The company used 6,700 indirect labor hours at a cost of $10 per hour (credit Wages Payable). 6. The company paid $178,500 for insurance, utilities, and property taxes on the factory. 7. The company recorded factory depreciation of $40,500. 8. The company applied manufacturing overhead to inventory based on the 20,000 labor hours actually worked during the year. 9. Products costing $663,000 were completed during the year and transferred to the Finished Goods Inventory. 10. During the year, the company sold products costing a total of $673,000. 11. The company closes under- and overapplied overhead to Cost of Goods Sold.

Accounting Homework please help

Answer 1

No	Account Titles and Explanation	Debit	Credit
1	No entry
	No entry
2	Raw material inventory	$104,000
	Accounts payable		$104,000
	(To record raw materials purchases)
3	Work in process inventory ($102,000 X 70%)	$71,400
	Factory overhead ($102,000 X 30%)	$30,600
	Raw materials inventory		$102,000
	(To record direct and indirect materials used in production)
4	Work in process inventory	$280,000
	Wages payable		$280,000
	(To record direct labor payroll - 20,000 X $14)
5	Factory Overhead	$67,000
	Wages payable		$67,000
	(To record indirect labor payroll - 6,700 X $10)
6	Factory Overhead	$178,500
	Cash		$178,500
	(To record other manufacturing overhead incurred)
7	Factory overhead	$40,500
	Depreciation-factory		$40,500
	(To record factory depreciation)
8	Work in process inventory	$320,000
	Factory Overhead		$320,000
	(To apply manufacturing overhead - 20,000 X $16)
9	Finished goods inventory	$663,000
	Work in process inventory		$663,000
	(To record transfer of completed products to finished goods)
10	Cost of goods sold	$673,000
	Finished goods inventory		$673,000
	(To record cost of sales)
11	Factory overhead	$3,400
	Cost of goods sold		$3,400
	(To dispose of overapplied overhead)

==> Predetermined overhead rate = $331,200 / 20,700 = $16 per direct labor hour

==> Applied overhead = 20,000 X $16 = $320,000

Actual overhead = $30,600 (D.M) + $67,000 (D.L) + $178,500 (other O.H) + $40,500 (Dep) = $316,600

==> $3,400 overhead is overapplied.