Acct306 Homework Ch04

Acct306 Homework Ch04 - CHAPTER 4 JOB COSTING 4-30...

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4-1 CHAPTER 4 JOB COSTING 4-30 Proration of overhead . overhead rate 1. Budgeted manufacturing = Budgeted manufacturing overhead cost Budgeted direct manufacturing labor cost $125,000 50% of direct manufacturing labor cost $250,000 = = 2. Overhead allocated = 50% × Actual direct manufacturing labor cost = 50% × $228,000 = $114,000 Underallocated manufacturing overhead = Actual manufacturing overhead costs Allocated plant overhead costs = $117,000 – $114,000 = $3,000 Underallocated manufacturing overhead = $3,000 3a. All underallocated manufacturing overhead is written off to cost of goods sold. Both work in process (WIP) and finished goods inventory remain unchanged. Account Dec. 31, 2011 Balance (Before Proration) (1) Proration of $3,000 Underallocated Manuf. Overhead (2) Dec. 31, 2011 Balance (After Proration) (3) = (1) + (2) WIP $ 50,700 $ 0 $ 50,700 Finished Goods 245,050 0 245,050 Cost of Goods Sold 549,250 3,000 552,250 Total $845,000 $3,000 $848,000 3b. Underallocated manufacturing overhead prorated based on ending balances: Account Dec. 31, 2011 Account Balance (Before Proration) (1) Account Balance as a Percent of Total (2) = (1) ÷ $845,000 Proration of $3,000 Underallocated Manuf. Overhead (3) = (2) × $3,000 Dec. 31, 2011 Account Balance (After Proration) (4) = (1) + (3) WIP $ 50,700 0.06 0.06 × $3,000 = $ 180 $ 50,880 Finished Goods 245,050 0.29 0.29 × $3,000 = 870 245,920 Cost of Goods Sold 549,250 0.65 0.65 × $3,000 = 1,950 551,200 Total $845,000 1.00 $3,000 $848,000
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4-2 3c. Underallocated manufacturing overhead prorated based on 2011 overhead in ending balances: Account Dec. 31, 2011 Account Balance (Before Proration) (1) Allocated Manuf. Overhead in Dec. 31, 2011 Balance (Before Proration) (2) Allocated Manuf. Overhead in Dec. 31, 2011 Balance as a Percent of Total (3) = (2) ÷ $114,000 Proration of $3,000 Underallocated Manuf. Overhead (4) = (3) × $3,000 Dec. 31, 2011 Account Balance (After Proration) (5) = (1) + (4) WIP $ 50,700 $ 10,260 a 0.09 0.09 × $3,000 = $ 270 $ 50,970 Finished Goods 245,050 29,640 b 0.26 0.26 × $3,000 = 780 245,830 Cost of Goods Sold 549,250 74,100 c 0.65 0.65 × $3,000 = 1,950 551,200 Total $845,000 $114,000 1.00 $3,000 $848,000 a,b,c Overhead allocated = Direct manuf. labor cost × 50% = $20,520; $59,280; $148,200 × 50% 4. Writing off all of the underallocated manufacturing overhead to Cost of Goods Sold (CGS) is usually warranted when CGS is large relative to Work-in-Process and Finished Goods Inventory and the underallocated manufacturing overhead is immaterial. Both these conditions apply in this case. ROW should write off the $3,000 underallocated manufacturing overhead to Cost of Goods Sold Account.
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4-3 4-31 Job costing, accounting for manufacturing overhead, budgeted rates.
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Acct306 Homework Ch04 - CHAPTER 4 JOB COSTING 4-30...

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