Manufacturing overhead applied to work in process

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Manufacturing overhead applied to work in process ................................................ 90,000 Total manufacturing costs .......................... 270,000 Add: Beginning work in process inventory.. 10,000 280,000 Deduct: Ending work in process inventory. 5,000 Cost of goods manufactured ...................... $275,000 2. Mason Company’s schedule of cost of goods sold is as follows: Beginning finished goods inventory ..... $ 20,000 Add: Cost of goods manufactured ........ 275,000 Cost of goods available for sale ............ 295,000 Deduct: Ending finished goods inventory ........................................... 35,000 Unadjusted cost of goods sold .............. 260,000 Deduct: Overapplied overhead* ........... 10,000 Adjusted cost of goods sold .................. $250,00 0 * Actual manufacturing overhead cost of $80,000 ‒ Manufacturing overhead applied of $90,000 = Overapplied overhead of $10,000.
Exercise 3-6 (continued) 3. Mason Company Income Statement Sales ......................................................... $524,00 0 Cost of goods sold ($260,000 – $10,000). . 250,000 Gross margin ............................................. 274,000 Selling and administrative expenses: Selling expenses ..................................... $140,00 0 Administrative expense .......................... 63,000 203,00 0 Net operating income ................................ $ 71,00 0
Exercise 3-7 (15 minutes) 1. Actual manufacturing overhead costs (a) ..................................................... $473,000 Manufacturing overhead cost applied: 19,400 MH × $25 per MH (b) ............ 485,000 Overapplied overhead cost (a) ‒ (b) .... $(12,000) 2. Direct materials: Beginning raw materials inventory... $ 20,000 Add: purchases of raw materials ....... 400,000 Total raw materials available ............ 420,000 Deduct: Ending raw materials inventory ........................................ 30,000 Raw materials used in production ..... 390,000 Less indirect materials ...................... 15,000 $375,00 0 Direct labor ......................................... 60,000 Manufacturing overhead applied to work in process ................................. 485,000 Total manufacturing costs ................... 920,000 Add: Beginning work in process inventory .......................................... 40,000 960,000 Deduct: Ending work in process inventory .......................................... 70,000 Cost of goods manufactured ............... $890,00 0
Exercise 3-8 (15 minutes) 1. Item (a): Actual manufacturing overhead costs incurred for the year. Item (b): Overhead cost applied to Work in Process for the year. Item (c): Cost of goods manufactured for the year. Item (d): Cost of goods sold for the year. 2. The journal entry to close the balance in the Manufacturing Overhead account to Cost of Goods Sold is: Cost of Goods Sold .................................... 70,00 0 Manufacturing Overhead ...................... 70,00 0 3. The underapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold based on the percentage of total overhead applied during the year that resides in each account as of the end of the year: Work in Process ......... $ 19,500 5 % Finished Goods ......... 58,500 15 Cost of Goods Sold .... 312,000 80 Total cost .................. $390,000 100 % Using these percentages, the journal entry would be as follows: Work in Process (5% × $70,000) ........... 3,500 Finished Goods (15% × $70,000) .......... 10,50 0 Cost of Goods Sold (80% × $70,000) .... 56,00 0 Manufacturing Overhead .................. 70,00 0
Exercise 3-9 (30 minutes) 1. The overhead applied to work in process is computed as follows: Machine-hours worked (a) ......................... 75,000 Predetermined overhead rate (b) .............. $2.40 per MH Overhead applied to work in process (a) × (b) ....................................................... $180,00 0 This amount is shown in entry (a) below: Manufacturing Overhead (Maintenance) 21,000 (a) 180,00 0 (Indirect materials) 8,000 (Indirect labor) 60,000 (Utilities) 32,000 (Insurance) 7,000 (Depreciation) 56,000 Balance 4,000 Work in Process (Direct materials) 710,00 0 (Direct labor) 90,000 (Overhead) (a) 180,00 0 2. Overhead is underapplied by $4,000 for the year, as shown in the Manufacturing Overhead account above. The entry to close out this balance to Cost of Goods Sold would be: Cost of Goods Sold ................................ 4,000 Manufacturing Overhead .................. 4,000
Exercise 3-9 (continued) 3. When overhead is applied using a predetermined rate

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