At year-end 2013, Dub's Wind Generator Co. had a $40,000 debit balance in its Manufacturing Overhead Control account. Overhead is applied to products based on direct labor cost. Relevant account balance information at year-end follows: Work-in process inventoryFinished inventoryCost of Goods soldDirect material$20,000$80,000$120,000Direct labor10,00040,00050,000Factory overhead20,00080,000100,000Total$50,000$200,000$270,000a. What predetermined OH rate was used during the year?b. Provide arguments to be used for deciding whether to prorate the balance in the overhead account at year-end.c. Prorate the overhead account balance based on the relative balances of the appropriate accounts.d. ldentify some posible reasons that the company had a debit balance in the overhead account at year-end.

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Answered: At year-end 2013, Dub's Wind Generator…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter6: Process Cost Accounting—additional Procedures; Accounting For Joint Products And By-products

Section: Chapter Questions

Problem 3P: On December 1, Carmel Valley Production Inc. had a work in process inventory of 1,200 units that...

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At year-end 2013, Dub's Wind Generator Co. had a $40,000 debit balance in its Manufacturing Overhead Control account. Overhead is applied to products based on direct labor cost. Relevant account balance information at year-end follows:

	Work-in process inventory	Finished inventory	Cost of Goods sold
Direct material	$20,000	$80,000	$120,000
Direct labor	10,000	40,000	50,000
Factory overhead	20,000	80,000	100,000
Total	$50,000	$200,000	$270,000