Exercise 3-4 (Algo) Underapplied and Overapplied Overhead [LO3-4]Osborn Manufacturing uses a predetermined overhead rate of $19.70 per direct labor-hour. This predetermined rate was based on acost formula that estimates $265,950 of total manufacturing overhead for an estimated activity level of 13,500 direct labor-hours.The company actually incurred $260,000 of manufacturing overhead and 13,000 direct labor-hours during the period.Required:1. Calculate the underapplied or overapplied manufacturing overhead.2. Assume the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the closing journal entryincrease or decrease gross margin? By how much?1. Manufacturing overhead2. The gross margin wouldunderapplieddecreaseby $ 3,900by The following an applies to the questions displayed below.jBunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company's inventory balances wereas follows:Raw materialsWork in processFinished goods$ 84,500$ 35,000$ 44,100The company applies overhead cost to jobs using direct labor-hours. For this year, the company's predeterminedoverhead rate of $12.50 per direct labor-hour was based on a cost formula that estimated $500,000 of totalmanufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions wererecorded this year:a. Raw materials were purchased on account, $614,000.b. Raw materials used in production, $567,600. All of of the raw materials were used as direct materials.c. The following costs were accrued for employee services: direct labor, $450,000; indirect labor, $150,000; selling andadministrative salaries, $290,000.d. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goodswarehousing), $375,000.e. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $350,000.f. Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on alljobs during the year.g. Jobs costing $1,461,900 to manufacture according to their job cost sheets were completed during the year.h. Jobs were sold on account to customers during the year for a total of $3,172,500. The jobs cost $1,471,900 tomanufacture according to their job cost sheets.Foundational 3-15 (Algo)15. What is the net operating income for this year?

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Exercise 3-4 (Algo) Underapplied and Overapplied Overhead [LO3-4] Osborn Manufacturing uses a predetermined overhead rate of $19.70 per direct labor-hour. This predetermined rate was based on a ost formula that estimates $265,950 of total manufacturing overhead for an estimated activity level of 13,500 direct labor-hours. he company actually incurred $260,000 of manufacturing overhead and 13,000 direct labor-hours during the period. equired: Calculate the underapplied or overapplied manufacturing overhead. Assume the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the closing journal entry increase or decrease gross margin? By how much? Manufacturing overhead The gross margin would underapplied decrease by $ 3,900 by

Exercise 3-4 (Algo) Underapplied and Overapplied Overhead [LO3-4] Osborn Manufacturing uses a predetermined overhead rate of $19.70 per direct labor-hour. This predetermined rate was based on a ost formula that estimates $265,950 of total manufacturing overhead for an estimated activity level of 13,500 direct labor-hours. he company actually incurred $260,000 of manufacturing overhead and 13,000 direct labor-hours during the period. equired: Calculate the underapplied or overapplied manufacturing overhead. Assume the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the closing journal entry increase or decrease gross margin? By how much? Manufacturing overhead The gross margin would underapplied decrease by $ 3,900 by

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Company XYZ uses direct labor hours to allocate its manufacturing overhead. Manufacturing overhead was estimated to be $410,000 for the year. Actual manufacturing overhead was $415,000 and actual labor hours were 22,000. The estimated direct labor hours for the year was 20,000. The amount of manufacturing overhead applied to production would be: Select one O a. $372,727 b. $451,000 C $462,000 O a d.5410,000 O e None of the answers given
Under- and overapplied overhead (LO 6) Kim-Brooks, Inc. makes costumes for movies and television shows. Brooks Kimberly, the company's owner, prepared the following estimates for the upcoming year: Manufacturing overhead cost $800,000 Direct labor hours 50,000 Direct labor cost $250,000 Machine hours 40,000 Required a.Assume that Kim-Brooks applies manufacturing overhead on the basis of direct labor hours. During the year, 49,800 direct labor hours were worked. How much overhead was applied to work in process? If actual manufacturing overhead for the year was $792,000, was overhead under- or overapplied during the year? By how much? bAssume that Kim-Brooks applies manufacturing overhead on the basis of direct labor cost. During the year, $245,000 in direct labor cost was incurred. How much overhead was applied to work in process during the year? If actual manufacturing overhead for the year was $792,600, was overhead under- or overapplied during the year? By how…
1. Cost of raw materials $132,000 2. Indirect materials $31,000 3. Indirect labor cost $19,000 4. Cost of goods manufactured $503,000 5. Unadjusted cost of goods sold $477,500 Questions: 1.If overhead is applied to production on the basis of direct labor cost, what predetermined overhead rate was in effect during the year? 2. Was manufacturing overhead underapplied or overapplied? By how much? 3. Compute the ending balance in Work in Process. Assume that this balance consists entirely of goods started during the year. If $10,750 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?
Problem 3-11 (Algo) T-Account Analysis of Cost Flows [LO3-2, LO3-3, LO3-4] Selected T-accounts of Moore Company are given below for the just completed year: Raw Materials Bal. 1/1 35,000 Credits ? Debits 160,000 Bal. 12/31 45,000 Manufacturing Overhead Debits 188,400 Credits ? Work in Process Bal. 1/1 40,000 Credits 530,000 Direct materials 110,000 Direct labor 210,000 Overhead 218,400 Bal. 12/31 ? Factory Wages Payable Debits 225,000 Bal. 1/1 19,000 Credits 220,000 Bal. 12/31 14,000 Finished Goods Bal. 1/1 60,000 Credits ? Debits ? Bal. 12/31 90,000 Cost of Goods Sold Debits ? Required: 1. What was the cost of raw materials used in production during the year? 2. How much of the materials in (1) above consisted of indirect materials? 3. How much of the factory labor cost for the year consisted of indirect labor? 4. What was the cost of…
Hamilton Company applies manufacturing overhead costs to products based on direct labor hours. The company estimates manufacturing overhead cost for the year to be $252,000 and direct labor hours to be 20,000. Actual overhead and actual direct labor hours for the year were $265,000 and 22,200 hours, respectively. Required: 1. Compute over- or underapplied overhead. 2a. Which accounts will be affected by the over- or underapplied manufacturing overhead? 2b. Will the accounts be increased or decreased to adjust for the over- or underapplied manufacturing overhead?
Problem 7-47 (Algo) Estimate Machine-Hours Worked from Overhead Data (LO 7-3) Melbourne Company estimated that machine-hours for the year would be 39,100 hours and overhead (all fixed) would be $144,670. Melbourne applies its overhead on the basis of machine-hours. During the year, all overhead costs were exactly as planned ($144,670). There was $22,200 in overapplied overhead. Required: How many machine-hours were worked during the period? (Do not round intermediate calculations.)
EXERCISE 3–2 Apply Overhead [LO3–2]Lexter Company uses a predetermined overhead rate of $23.40 per direct labor-hour. This predetermined rate wasbased on a cost formula that estimated $257,400 of total manufacturing overhead for an estimated activity level of11,000 direct labor-hours. The company incurred actual total manufacturing overhead costs of $249,000 and 10,800total direct labor-hours during the period.Required:Determine the amount of manufacturing overhead that would have been applied to all jobs during the period.
Exercise 7-32 (Algo) Prorate Over- or Underapplied Overhead (LO 7- 3) Yarra Fabrication estimates that its manufacturing overhead will be $2,316,800 in year 1. It further estimates that direct material costs will amount to $1,448,000. Actual manufacturing overhead costs for the year were $2,460,000. Actual direct materials costs were $1,610,000. Manufacturing overhead is applied to jobs based on direct materials cost using predetermined rates. The total applied overhead for the year was $2,576,000 The balance in each of the inventory accounts is as follows. Work-in-process inventory $ 484,000 Finished goods inventory $ 1,144,000 Cost of goods sold $ 7,172,000 Required: Prepare an entry to allocate the over- or underapplied overhead. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Exercise 2-1 (Algo) Compute a Predetermined Overhead Rate [LO2-1] Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 38,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $502,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. Harris’s actual manufacturing overhead cost for the year was $645,280 and its actual total direct labor was 38,500 hours. Required: Compute the company’s plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.) predetermined overhead rate: per DLH
Exercise 2-2 (Algo) Apply Overhead Cost to Jobs [LO2-2] Luthan Company uses a plantwide predetermined overhead rate of $22.10 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $265,200 of total manufacturing overhead cost for an estimated activity level of 12,000 direct labor-hours. The company incurred actual total manufacturing overhead cost of $265,000 and 11,700 total direct labor-hours during the period. Required: Determine the amount of manufacturing overhead cost that would have been applied to all jobs during the period.
EXERCISE 3-12 Applying Overhead; Cost of Goods Manufactured [LO3-2, L03-6, LO3-7] The following cost data relate to the manufacturing activities of Chang Company during the just completed year: $ 15,000 130,000 8,000 70,000 240,000 10,000 $473,000 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 ...... $400,000 $60,000 $20,000 $30,000 $40,000 $70,000 The company uses a predetermined overhead rate to apply overhead cost to jobs. The rate for the year was $25 per machine-hour. A total of 19,400 machine-hours was recorded for the year.…
TB MC Qu. 7-95 (Algo) Golden Corporation uses direct labor-hours in its... Golden Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 23,500 hours. At the end of the year, actual direct labor-hours for the year were 22,300 hours, the actual manufacturing overhead for the year was $596,220, and manufacturing overhead for the year was underapplied by $25,340. The estimated manufacturing overhead at the beginning of the year used to calculate the predetermined overhead rate must have been: Multiple Choice : A ) $570,880. B) $601,600. C) $622,646. D) $590,840.