D the departments manufacturing overhead was

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D. The department's manufacturing overhead was underapplied by $232,000. As a result of this situation, insufficient overhead flowed from Work in Process, to Finished Goods, to Cost of Goods Sold, meaning that the Cost-of-Goods-Sold account must be increased at year-end. E. The Work-in-Process account is charged with applied overhead, or $11,910,000. F. The firm's selection of application bases is likely appropriate. The bases should "drive" the costs, meaning there should be a strong cause-and-effect relationship between the base that is used and the amount of overhead incurred. In the Assembly Department, a considerable portion of the overhead incurred is related to manual-assembly (i.e., labor) operations. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A Difficulty: Hard Learning Objective: 03-04 Compute a predetermined overhead rate and explain its use in job-order costing for job-shop and batch- production environments. Learning Objective: 03-05 Prepare journal entries to record the costs of direct material Learning Objective: 03-06 Prepare a schedule of cost of goods manufactured Learning Objective: a schedule of cost of goods sold Learning Objective: and an income statement for a manufacturer. Learning Objective: and manufacturing overhead in a job-order costing system. Learning Objective: direct labor 3- 79
Chapter 03 - Product Costing and Cost Accumulation in a Batch Production Environment 74. Kei Products uses a predetermined overhead application rate of $18 per labor hour. A review of the company's accounting records revealed budgeted manufacturing overhead for the period of $621,000, applied manufacturing overhead of $590,400, and overapplied overhead of $11,900. Required: A. Determine Kei's actual labor hours, budgeted labor hours, and actual manufacturing overhead. B. Present the necessary year-end journal entry to handle the overapplied overhead, assuming that the firm allocates over- or underapplied overhead to Cost of Goods Sold. A. Actual labor hours: $590,400 ÷ $18 per hour = 32,800 hours Budgeted labor hours: $621,000 ÷ $18 per hour = 34,500 hours Actual manufacturing overhead: $590,400 - $11,900 = $578,500 B. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A Difficulty: Hard Learning Objective: 03-04 Compute a predetermined overhead rate and explain its use in job-order costing for job-shop and batch- production environments. Learning Objective: 03-05 Prepare journal entries to record the costs of direct material Learning Objective: and manufacturing overhead in a job-order costing system. Learning Objective: direct labor 3- 80
Chapter 03 - Product Costing and Cost Accumulation in a Batch Production Environment 75. A review of the records of Pilgrim, Inc., a new company, disclosed the following year-end information: · Manufacturing Overhead account : Contained debits of $872,000, which included $20,000 of sales commissions.

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