Question

Alex Constructors uses job-order costing for production of custom playground sets. The company incurred the following costs during March: Direct materials used $22,000 Direct labor $14,000 Applied overhead $18,000 Actual overhead $20,000 If Alex Constructors closes out any under or overapplied overhead directly to cost of goods sold, which entry will the company make to eliminate the over or underapplied amount in March? Cost of Goods Sold 2,000 Work in Process Inventory 2,000 2,000 Manufacturing Overhead Work in Process Inventory 2,000 Manufacturing Overhead 2,000 Cost of Goods Sold 2,000 o Cost of Goods Sold 2,000 2,000 Manufacturing Overhead

Answer 1

Answer:
Over (or) Underapplied Overhead             = Actual Overhead (-) Applied Overhead             =   $ 20,000 (-) $ 18,000	$ 2,000 (Underapplied )
Account Titles and Explanations	Debit	Credit
Cost of Goods Sold	$ 2,000
Manufacturing Overhead		$ 2,000
(To record the elimination of Underapplied OH to Cost of Goods Sold )
Option (d) is Correct