Question

Aspen Company estimates its manufacturing overhead to be $646,250 and its direct labor costs to be $517,000 for year 2. Aspen worked on three jobs for the year. Job 2-1, which was sold during year 2, had actual direct labor costs of $151064. Job 2-2, which was completed, but not sold at the end of the year, had actual direct labor costs of $380,944. Job 2-3, which is still in work-in-process inventory, had actual direct labor costs of $124,792. Actual manufacturing overhead for year 2 was $806,700. Manufacturing overhead is applied on the basis of direct labor costs. Required: Prepare an entry to allocate over- or underapplied overhead to Work in Process, Finished Goods and Cost of Goods Sold. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction that Journal entry worksheet Record the allocation of over- or underapplied overhead. Note: Enter debits before credits

Answer 1

с B Amount $ 6,46,250 $ 5,17,000 $ 1.25 A 1 Particulars 2 Estimated overheads 3 Estimated direct labor costs 4 Applied overhead per direcct labor dollar 5 Applied overheads to Jobs 6 Job 2-1 7 Job 2-2 8 Job 2-3 9 Total 10 Actual overhead 11 Over-applied overhead 12 13 14 Account titles & Explanations 15 16 Manufacturing overhead 17 Work in process inventory 18 Finished goods inventory 19 Cost of goods sold $ 1,88,830 $ 4,76,180 $ $1,55.990 $ 8.21,000 806700 $ 14,300 Debit Credit $ 14,300 $ 2.717 $ 8.294 $ 3.289 Calculations: B 1 Particulars Amount 2 Estimated overheads 646250 3 Estimated direct labor costs 517000 4 Applied overhead per direct labor dollar =B2/B3 5 Applied overheads to Jobs 6 Job 2-1 B4151064 7 Job 2-2 -B48380944 8 Job 2-3 =B4 124792 9 Total =B6+B7+B8 10 Actual overhead 806700 11 Over-applied overhead B9-B10 12 13 14 Account titles & Explanations Debit 15 16 Manufacturing overhead =B11 17 Work in process inventory 18 Finished goods inventory 19 Cost of goods sold Credit =B16/(151064+380944+124792)*124792 -B16/151064+380944+124792)*380944 =B16/(151064+380944+124792)*151064