Question

2-5 Explain the four-step process used to compute a predetermined overhead rate. 2-6 What is the purpose of the job cost sheet in a job-order costing system? 2-7 Explain why some production costs must be assigned to products through an allocation process. 2-8 Why do companies use predetermined overhead rates rather than actual manufacturing overhead costs to apply overhead to jobs? 2-9 What factors should be considered in selecting an allocation base to be used in computing a predetermined overhead rate? 2-10 If a company fully allocates all of its overhead costs to jobs, does this guarantee that a profit will be earned for the period? 2-11 Would you expect the amount of applied overhead for a period to equal the actual over- head costs of the period? Why or why not? 2-12 What is underapplied overhead? Overapplied overhead? 2-13 What is a plantwide overhead rate? Why are multiple overhead rates, rather than a plant- wide overhead rate, used in some companies?

if anyone could answer both pictures (all questions) that would be icredibly amazing! But understandable if not, but if you cant do both please atleast do all the questions in one of the picture boxes (either all of 2-5-2-13 or all of 3-5 - 3-10) at the minimum. Thanks

Answer 1

3-5:

Underapplied overhead is balanced by inputting a debit to the cost of goods sold (COGS) section by the end of the year. Costs of goods sold are the direct cost associated with the production of goods sold by a company. The amount of underapplied overhead is referred to as an unfavorable variance.

For over applied overhead, a journal entry must be made at the end of the period to reconcile the difference between the estimated amount and the actual overhead costs. In this case we would, debit the factory overhead account and credit the cost of goods sold account for the difference.

3-6:

Start with the Beginning Raw MaterialsInventory value and add all raw materials purchased during the selected accounting period. Then, subtract the ending inventory value. This is the valuation of the directmaterials used in production.

3-7:

The calculation of total manufacturing cost is as follows:

1. Direct materials. Add the total cost of materials purchases in the period to the cost of beginning inventory, and subtract the cost of ending inventory. The result is the cost of direct materials incurred during the period.

2. Direct labor. Compile the cost of all direct manufacturing labor incurred during the period, including the cost of related payroll taxes. The result is the cost of direct labor.

3. Overhead. Aggregate the cost of all factory overhead incurred during the period. This includes such costs as production salaries, facility rent, repairs and maintenance, and equipment depreciation.

4. Add together the totals derived from the first three steps to arrive at total manufacturing cost.

3-8:

The cost of goods manufactured is a calculation of the production costs of the goods that were completed during an accounting period. In other words, it includes the costs of direct materials, direct labor, and manufacturing overhead that are included in the products that moved from the manufacturing area to the finished goods inventory during the accounting period. The calculation is presented as a schedule or statement.

Example of the Cost of Goods Manufactured

The formula and format for presenting the cost of goods manufactured is:

• The cost of the direct materials used
• PLUS the cost of the direct labor used
• PLUS the cost of manufacturing overhead assigned
• EQUALS = the manufacturing costs incurred in the current accounting period
• PLUS the cost of the beginning work-in-process inventory
• MINUS the cost of the ending work-in-process inventory

3-9:

The calculation of the cost of goods sold for a manufacturing company is:

1. Beginning Inventory of Finished Goods.
2. Add: Cost of Goods Manufactured.
3. Equals: Finished Goods Available for Sale.
4. Subtract: Ending Inventory of Finished Goods.
5. Equals: Cost of Goods Sold.

3-10:

The basic flow of costs in a job-order system begins by recording the costs of material, labor, and manufacturing overhead.

a. Direct material and direct labor costs are debited to the Work In Process account. Any indirect material or indirect labor costs are debited to the Manufacturing Overhead control account, along with any other actual manufacturing overhead costs incurred during the period. Manufacturing overhead is applied to Work In Process using the predetermined rate. The offsetting credit entry is to the Manufacturing Overhead control account.

b. The cost of finished units is credited to Work In Process and debited to the Finished Goods inventory account.

c. When units are sold, their costs are credited to Finished Goods and debited to Cost of Good Sold.