Primare Corporation provided the following data for last month’s manufacturing operations.
Purchases of raw materials
Indirect materials used in production
Direct labor
Manufacturing overhead applied to work in process
Underapplied overhead
Inventories
Raw materials
Work in process
Finished goods
Required:
1. Prepare a schedule of cost of goods manufactured.
2. Prepare a schedule of cost of goods sold. Assume the underapplied or overapplied overhead is closed to Cost of Goods Sold.
Explanation
No further explanation details are available for this problem.
Prepare a schedule of cost of goods manufactured.
Prepare a schedule of cost of goods sold. Assume the underapplied or overapplied overhead is closed to Cost of Goods
,Chang Company provided the following data for this year:
Manufacturing overhead costs incurred:
Indirect materials
Indirect labor
Property taxes, factory
Utilities, factory
Depreciation, factory
Insurance, factory
Total actual manufacturing overhead costs incurred
Other costs incurred:
Purchases of raw materials (both direct and indirect)
Direct labor cost
Inventories:
Raw materials, beginning
Raw materials, ending
Work in process, beginning
Work in process, ending
The company uses a predetermined overhead rate of $26 per machine-hour to apply overhead cost to jobs. A total of 19,800 machine-h
Required:
1. Compute the underapplied or overapplied overhead cost.
2. Prepare a schedule of cost of goods manufactured.
Explanation
1
Actual manufacturing overhead costs (a)
Manufacturing overhead cost applied: 19,800 MH × $26 per MH (b)
Overapplied overhead cost (a) − (b)
,Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies m
During the year, a large quantity of furniture on the market caused Luzadis to cut production and build inventories. The company provid
Machine-hours
Manufacturing overhead cost
Inventories at year-end:
Raw materials
Work in process (includes overhead applied of $88,400)
Finished goods (includes overhead applied of $132,600)
Cost of goods sold (includes overhead applied of $663,000)
Required:
1. Compute the underapplied or overapplied overhead.
2. Assume the company closes underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry.
3. Assume the company allocates underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost
4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process,
Explanation
1. The predetermined overhead rate is computed as follows:
Estimated total manufacturing overhead (a)
Estimated total machine-hours (b)
Predetermined overhead rate (a) ÷ (b)
Actual manufacturing overhead cost
Manufacturing overhead cost applied to work in
process during the year: 68,000 actual MHs × $13 per MH
Underapplied overhead cost
3. The underapplied overhead would be allocated using the following percentages:
Overhead applied during the year in:
Work in process
Finished goods
Cost of goods sold
Total
The entry to record the allocation of the underapplied overhead would be:
Work in process (10% × $145,000)
Finished goods (15% × $145,000)
Cost of goods sold (75% × $145,000)
Manufacturing overhead
4. Comparing the two methods:
Cost of goods sold if the underapplied overhead is closed to cost of goods sold ($1,440,000 + $145,
Cost of goods sold if the underapplied overhead is closed to Work in Process, Finished Goods, and C
Difference in cost of goods sold
Thus, net operating income will be $36,250 greater if the underapplied overhead is closed to Work in Process, Finished Goods, and Co
, Gitano Products uses job-order costing and applies overhead cost to jobs based on direct materials used in production (not on the bas
Purchase of raw materials
Direct labor cost
Manufacturing overhead costs:
Indirect labor
Property taxes
Depreciation of equipment
Maintenance
Insurance
Rent, building
Raw Materials
Work in Process
Finished Goods
Required:
1. Compute the predetermined overhead rate.
2. Compute the amount of underapplied or overapplied overhead.
3. Prepare a schedule of cost of goods manufactured. Assume all raw materials are used in production as direct materials.
4. Compute the unadjusted cost of goods sold. Do not include any underapplied or overapplied overhead in your answer.
5. Assume the $37,000 ending balance in Work in Process includes $8,900 of direct materials. Given this assumption, supply the inform
Explanation
1. The predetermined overhead rate is computed as follows:
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base
= $117,000 ÷ $90,000 direct materials cost = 130%
2. Before the underapplied or overapplied overhead can be computed, we must determine the amount of direct materials used in produ
Beginning raw materials inventory
Add: Purchases of raw materials
Total raw materials available
Deduct: Ending raw materials inventory
Raw materials used in production
Actual manufacturing overhead costs:
Indirect labor
Property taxes
Depreciation of equipment
Maintenance
Insurance
Rent, building
Total actual costs
Manufacturing overhead applied to work in process ($146,000 × 130%)
Purchases of raw materials
Indirect materials used in production
Direct labor
Manufacturing overhead applied to work in process
Underapplied overhead
Inventories
Raw materials
Work in process
Finished goods
Required:
1. Prepare a schedule of cost of goods manufactured.
2. Prepare a schedule of cost of goods sold. Assume the underapplied or overapplied overhead is closed to Cost of Goods Sold.
Explanation
No further explanation details are available for this problem.
Prepare a schedule of cost of goods manufactured.
Prepare a schedule of cost of goods sold. Assume the underapplied or overapplied overhead is closed to Cost of Goods
,Chang Company provided the following data for this year:
Manufacturing overhead costs incurred:
Indirect materials
Indirect labor
Property taxes, factory
Utilities, factory
Depreciation, factory
Insurance, factory
Total actual manufacturing overhead costs incurred
Other costs incurred:
Purchases of raw materials (both direct and indirect)
Direct labor cost
Inventories:
Raw materials, beginning
Raw materials, ending
Work in process, beginning
Work in process, ending
The company uses a predetermined overhead rate of $26 per machine-hour to apply overhead cost to jobs. A total of 19,800 machine-h
Required:
1. Compute the underapplied or overapplied overhead cost.
2. Prepare a schedule of cost of goods manufactured.
Explanation
1
Actual manufacturing overhead costs (a)
Manufacturing overhead cost applied: 19,800 MH × $26 per MH (b)
Overapplied overhead cost (a) − (b)
,Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies m
During the year, a large quantity of furniture on the market caused Luzadis to cut production and build inventories. The company provid
Machine-hours
Manufacturing overhead cost
Inventories at year-end:
Raw materials
Work in process (includes overhead applied of $88,400)
Finished goods (includes overhead applied of $132,600)
Cost of goods sold (includes overhead applied of $663,000)
Required:
1. Compute the underapplied or overapplied overhead.
2. Assume the company closes underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry.
3. Assume the company allocates underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost
4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process,
Explanation
1. The predetermined overhead rate is computed as follows:
Estimated total manufacturing overhead (a)
Estimated total machine-hours (b)
Predetermined overhead rate (a) ÷ (b)
Actual manufacturing overhead cost
Manufacturing overhead cost applied to work in
process during the year: 68,000 actual MHs × $13 per MH
Underapplied overhead cost
3. The underapplied overhead would be allocated using the following percentages:
Overhead applied during the year in:
Work in process
Finished goods
Cost of goods sold
Total
The entry to record the allocation of the underapplied overhead would be:
Work in process (10% × $145,000)
Finished goods (15% × $145,000)
Cost of goods sold (75% × $145,000)
Manufacturing overhead
4. Comparing the two methods:
Cost of goods sold if the underapplied overhead is closed to cost of goods sold ($1,440,000 + $145,
Cost of goods sold if the underapplied overhead is closed to Work in Process, Finished Goods, and C
Difference in cost of goods sold
Thus, net operating income will be $36,250 greater if the underapplied overhead is closed to Work in Process, Finished Goods, and Co
, Gitano Products uses job-order costing and applies overhead cost to jobs based on direct materials used in production (not on the bas
Purchase of raw materials
Direct labor cost
Manufacturing overhead costs:
Indirect labor
Property taxes
Depreciation of equipment
Maintenance
Insurance
Rent, building
Raw Materials
Work in Process
Finished Goods
Required:
1. Compute the predetermined overhead rate.
2. Compute the amount of underapplied or overapplied overhead.
3. Prepare a schedule of cost of goods manufactured. Assume all raw materials are used in production as direct materials.
4. Compute the unadjusted cost of goods sold. Do not include any underapplied or overapplied overhead in your answer.
5. Assume the $37,000 ending balance in Work in Process includes $8,900 of direct materials. Given this assumption, supply the inform
Explanation
1. The predetermined overhead rate is computed as follows:
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base
= $117,000 ÷ $90,000 direct materials cost = 130%
2. Before the underapplied or overapplied overhead can be computed, we must determine the amount of direct materials used in produ
Beginning raw materials inventory
Add: Purchases of raw materials
Total raw materials available
Deduct: Ending raw materials inventory
Raw materials used in production
Actual manufacturing overhead costs:
Indirect labor
Property taxes
Depreciation of equipment
Maintenance
Insurance
Rent, building
Total actual costs
Manufacturing overhead applied to work in process ($146,000 × 130%)
