Budgeted Manufacturing Overhead |
$500,000 |
Actual Manufacturing Overhead |
$400,000 |
Budgeted Direct Labor Hours |
20,000 hours |
Actual Direct Labor Hours |
21,000 hours |
Ending balances in the relevant accounts were:
Raw Materials |
$26,432 |
Work-in-Process |
40,000 |
Finished Goods |
80,000 |
Cost of Goods Sold |
680,000 |
1) | Account titles & Explanations | Debit | Credit | |||||
Manufacturing overhead | 400,000 | |||||||
Accumulated depreciation | 200,000 | |||||||
utilities payable | 200,000 | |||||||
2) | overhead allocated to jobs | |||||||
500,000/20,000*21000 | ||||||||
525000 | ||||||||
3) | overapplied overhead | |||||||
applied overhead | 525,000 | |||||||
Actual overhead | 400,000 | |||||||
overhead overapplied | 125,000 | answer | ||||||
4) | Account titles & Explanations | Debit | Credit | |||||
manufacturing overhead | 125,000 | |||||||
cost of goods sold | 125,000 | |||||||
5) | Account titles & Explanations | Debit | Credit | |||||
Manufacturing overhead | 125,000 | |||||||
Work in process | 6250 | |||||||
finished goods | 12500 | |||||||
cost of goods sold | 106,250 | |||||||
6) | should follow e as the amount of overhead overapplied is high so it would be | |||||||
better to use prorated method otherwise the cost of goods sold will be expectionally | ||||||||
low | ||||||||
1) | Account titles & Explanations | Debit | Credit |
Manufacturing overhead | 400,000 | ||
Accumulated depreciation | 200,000 | ||
utilities payable | 200,000 | ||
2) | overhead allocated to jobs | ||
500,000/20,000*21000 | |||
525000 | |||
3) | overapplied overhead | ||
applied overhead | 525,000 | ||
Actual overhead | 400,000 | ||
overhead overapplied | 125,000 | answer | |
4) | Account titles & Explanations | Debit | Credit |
not prorated | |||
manufacturing overhead | 125,000 | ||
cost of goods sold | 125,000 | ||
5) | Account titles & Explanations | Debit | Credit |
prorated | |||
(125000/800000) = 0.15625 | |||
Manufacturing overhead | 125,000 | ||
Work in process (40000*0.15625) | 6250 | ||
finished goods (80000*0.15625) | 12500 | ||
cost of goods sold (680000*0.15625) | 106,250 | ||
6) | should follow e as the amount of overhead overapplied is high so it would be | ||
better to use prorated method otherwise the cost of goods sold will be expectionally | |||
low | |||
Moira Company has just finished its first year of operations and must decide which method to...
6. Moira Company has just finished its first year of operations and must decide which method to use for adjusting cost of goods sold. Because the company used a budgeted indirect-cost rate for its manufacturing operations, the amount that was allocated (5135,000) to cost of goods sold was different from the actual amount incurred ($425,000). Ending balances in the relevant accounts were: Work-in-Process Finished Goods Cost of Goods Sold $ 40,000 80,000 680,000 Required: (8 points) a. Prepare a journal...
Moira Paints, Inc has just finished its first year of operations. At year end, MOH allocated was $435,000 and MOH control was $425,000. The firms decides to prorate the under or overapplied overhead based on the ending balances in the appropriate accounts. Ending balances are: Materials inventory $20,000 WIP inventory 40,000 FG inventory 80,000 COGS 680,000 After closing out the overhead accounts using the proration method, what is the balance in the WIP inventory account? Question 1 options: a) $ 39,500 b) $ 45,000...
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