Question

2. Greer Company developed the following data for the current year:

Beginning work in process inventory                     $ 102,000

Direct materials used                                                 156,000

Actual overhead                                                         132,000

Overhead applied                                                      138,000

Cost of goods manufactured                                     675,000

Total manufacturing costs                                          642,000

How much is Greer Company's ending work in process inventory for the year?

Is the Manufacturing Overhead Overapplied or Underapplied and by how much?

Record the journal entry for Over/Under applied OH for this problem.

What account will the COGM of $675,000 be transferred to?

What type of account is Works-in-Process?

What three costs make up Total Manufacturing Costs?

Answer 1

(i)

Total manufacturing cost	642,000
Add: Beginning work in process inventory	102,000
	744,000
Less: Ending work in process inventory	- 69,000
Cost of goods manufactured	675,000

Ending work in process inventory = $69,000

(ii)

Actual overhead = $132,000

Applied overhead = $138,000

Since applied overhead is more than actual overhead, hence overhead is over applied.

Over applied overhead = Applied overhead - Actual overhead

= 138,000 - 132,000

= $6,000

(iii)

Journal

Date	Account title	Debit	Credit
	Manufacturing overhead	6,000
	Cost of goods sold		6,000

(iv)

Cost of goods manufactured is transferred to cost of goods sold

(v)

Work in process is an asset account.

(vi)

Manufacturing cost is the sum total of direct materials used, direct labor cost and manufacturing overheads.

Kindly give a positive rating if you are satisfied with the answer. Feel free to ask if you have any doubt. Thanks.