Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Textbook Question
Chapter 4, Problem 17E
Nelson Fabrication Inc. had a remaining credit balance of $20,000 in its under- and overapplied factory
- a. Determine the prorated amount of the overapplied factory overhead that is chargeable to each of the accounts.
- b. Prepare the
journal entry to close the credit balance in Under- and Overapplied Factory Overhead.
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Chapter 4 Solutions
Principles of Cost Accounting
Ch. 4 - What are factory overhead expenses, and what...Ch. 4 - What are three categories of factory overhead...Ch. 4 - What are the distinguishing characteristics of...Ch. 4 - When a products cost is composed of fixed and...Ch. 4 - What effect does a change in volume have on total...Ch. 4 - Distinguish between a step-variable cost and a...Ch. 4 - What is the basic premise underlying the high-low...Ch. 4 - What are the advantages and disadvantages of the...Ch. 4 - Differentiate between an independent variable and...Ch. 4 - Prob. 10Q
Ch. 4 - What is a flexible budget, and how can management...Ch. 4 - How does accounting for factory overhead differ in...Ch. 4 - What is the function and use of each of the two...Ch. 4 - What are two types of departments found in a...Ch. 4 - What are the two most frequently used methods of...Ch. 4 - When using the sequential distribution method of...Ch. 4 - When using the sequential distribution method of...Ch. 4 - Is it possible to close the total factory overhead...Ch. 4 - What are the shortcomings of waiting until the...Ch. 4 - What are the two types of budget data needed to...Ch. 4 - Prob. 21QCh. 4 - What factory operating conditions and data are...Ch. 4 - Prob. 23QCh. 4 - How does activity-based costing differ from...Ch. 4 - What steps must a company take to successfully...Ch. 4 - What is the relationship between activity-based...Ch. 4 - Prob. 27QCh. 4 - Prob. 28QCh. 4 - If the factory overhead control account has a...Ch. 4 - Prob. 30QCh. 4 - Classify each of the following items of factory...Ch. 4 - Ames Automotive Company has accumulated the...Ch. 4 - Prob. 3ECh. 4 - Using the data in E4-2 and spreadsheet software,...Ch. 4 - El Paso Products Company has accumulated the...Ch. 4 - Computing unit costs at different levels of...Ch. 4 - Identifying basis for distribution of service...Ch. 4 - A manufacturing company has two service and two...Ch. 4 - A manufacturing company has two service and two...Ch. 4 - Compute the total job cost for each of the...Ch. 4 - Classify each of the following items of factory...Ch. 4 - Job 25AX required 5,000 for direct materials,...Ch. 4 - Job 19AB required 10,000 for direct materials,...Ch. 4 - Match each of the following cost pools with the...Ch. 4 - The books of Petry Products Co. revealed that the...Ch. 4 - The general ledger of Lawson Lumber Co. contains...Ch. 4 - Nelson Fabrication Inc. had a remaining credit...Ch. 4 - Housley Paints Co. had a remaining debit balance...Ch. 4 - The cost behavior patterns below are lettered A...Ch. 4 - Miller Minerals Co. manufactures a product that...Ch. 4 - Scattergraph method Using the data in P4-2 and a...Ch. 4 - Using the data in P4-2 and Microsoft Excel: 1....Ch. 4 - Listed below are the budgeted factory overhead...Ch. 4 - Menlo Materials is divided into five departments,...Ch. 4 - Distribution of service department costs to...Ch. 4 - Journalizing the distribution of service...Ch. 4 - Channel Products Inc. uses the job order cost...Ch. 4 - Determining job costcalculation of predetermined...Ch. 4 - Focus Fabrication Co. uses ABC. The factory...Ch. 4 - Mansfield Manufacturing Co. uses ABC. The factory...Ch. 4 - Hughes Products Inc. uses a job order cost system....Ch. 4 - Abbey Products Company is studying the results of...Ch. 4 - The following information, taken from the books of...Ch. 4 - Rockford Company has four departmental accounts:...Ch. 4 - Luna Manufacturing Inc. completed Job 2525 on May...Ch. 4 - Phillips Products, Inc. had a remaining credit...Ch. 4 - Nathan Industries had a remaining debit balance of...Ch. 4 - Chrome Solutions Company manufactures special...Ch. 4 - Activity-based Costing
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- Phillips Products, Inc. had a remaining credit balance of $10,000 in its under- and overapplied factory overhead account at year-end. It also had year-end balances in the following accounts: Required: Prepare the closing entry for the $10,000 of overapplied overhead, assuming that the balance is not considered to be material. Prepare the closing entry for the $10,000 of overapplied overhead, assuming that the balance is considered to be material.arrow_forwardNathan Industries had a remaining debit balance of $20,000 in its under- and overapplied factory overhead account at year-end. It also had year-end balances in the following accounts: Required: Prepare the closing entry for the $20,000 of underapplied overhead, assuming that the balance is not considered to be material. Prepare the closing entry for the $20,000 of underapplied overhead, assuming that the balance is considered to be material.arrow_forwardIf the factory overhead control account has a credit balance of 2,000 at the end of the first month of the fiscal year, has the overhead been under- or overapplied for the month? What are some probable causes for the credit balance?arrow_forward
- At the end of the fiscal year, there s a relatively minor balance in the factory overhead account. What procedure can be used for disposing of the balance in the accountarrow_forwardHuron Manufacturing Co. uses a job order cost system to cost its products. It recently signed a new contract with the union that calls for time-and-a-half for all work over 40 hours a week and double-time for Saturday and Sunday. Also, a bonus of 1% of the employees earnings for the year is to be paid to the employees at the end of the fiscal year. The controller, the plant manager, and the sales manager disagree as to how the overtime pay and the bonus should be allocated. An examination of the first months payroll under the new union contract provisions shows the following: Analysis of the supporting payroll documents revealed the following: a. More production was scheduled each day than could be handled in a regular workday, resulting in the need for overtime. b. The Saturday and Sunday hours resulted from rush orders with special contract arrangements with the customers. The controller believes that the overtime premiums and the bonus should be charged to factory overhead and spread over all production of the accounting period, regardless of when the jobs were completed. The plant manager favors charging the overtime premiums directly to the jobs worked on during overtime hours and the bonus to administrative expense. The sales manager states that the overtime premiums and bonus are not factory costs chargeable to regular production but are costs created from administrative policies and, therefore, should be charged only to administrative expense. Required: 1. Evaluate each positionthe controllers, the plant managers, and the sales managers. If you disagree with all of the positions taken, present your view of the appropriate allocation. 2. Prepare the journal entries to illustrate the position you support, including the accrual for the bonus.arrow_forwardThe adjusted trial balance for Appleton Appliances, Ltd. on June 30, the end of its first month of operation, is as follows: The general ledger reveals the following additional data: a. There were no beginning inventories. b. Materials purchases during the period were 23,000. c. Direct labor cost was 18,500. d. Factory overhead costs were as follows: Required: 1. Prepare a statement of cost of goods manufactured for June. 2. Prepare an income statement for June. (Hint: Check to be sure that your figure for Cost of Goods Sold equals the amount given in the trial balance.) 3. Prepare a balance sheet as of June 30. (Hint: Do not forget Retained Earnings.)arrow_forward
- Pocono Cement Forms expects $900,000 in overhead during the next year. It does not know whether it should apply overhead on the basis of its anticipated direct labor hours of 60,000 or its expected machine hours of 30,000. Determine the product cost under each predetermined allocation rate if the last job incurred $1,550 in direct material cost, 90 direct labor hours, and 75 machine hours. Wages are paid at $16 per hour.arrow_forwardThe post-closing trial balance of Custer Products, Inc. on April 30 is reproduced as follows: During May, the following transactions took place: a. Purchased raw materials at a cost of 45,000 and general factory supplies at a cost of 13,000 on account (recorded materials and supplies in the materials account). b. Issued raw materials to be used in production, costing 47,000, and miscellaneous factory supplies costing 15,000. c. Recorded the payroll and the payments to employees as follows: factory wages (including 12,000 indirect labor), 41,000; and selling and administrative salaries, 7,000. Additional account titles include Wages Payable and Payroll. (Ignore payroll withholdings and deductions.) d. Distributed the payroll in (c). e. Recognized depreciation for the month at an annual rate of 5% on the building, 10% on the factory equipment, and 20% on the office equipment. The sales and administrative staff uses approximately one-fifth of the building for its offices. f. Incurred other expenses totaling 11,000. One-fourth of this amount is allocable to the office function. g. Transferred total factory overhead costs to Work in Process. h. Completed and transferred goods with a total cost of 91,000 to the finished goods storeroom. i. Sold goods costing 188,000 for 362,000. (Assume that all sales were made on account.) j. Collected accounts receivable in the amount of 345,000. k. Paid accounts payable totaling 158,000. Required: 1. Prepare journal entries to record the transactions. 2. Set up T-accounts. Post the beginning trial balance and the journal entries prepared in (1) to the accounts and determine the balances in the accounts on May 31. 3. Prepare a statement of cost of goods manufactured, an income statement, and a balance sheet. (Round amounts to the nearest whole dollar.)arrow_forwardLavender Manufacturing Company began business in the current year. The company uses the simplified method to allocate mixed services costs to production. The companys costs and expenses for the year were as follows. a. Determine Lavenders total production costs for the year. b. Assume that the hourly pay for direct labor is much lower than the hourly pay for employees in general administration and that the employee turnover is much higher for production employees than for general administration employees. How should these facts affect the companys decision to use the simplified mixed services method to allocate mixed services costs to production?arrow_forward
- The books of Petry Products Co. revealed that the following general journal entry had been made at the end of the current accounting period: The total direct materials cost for the period was $40,000. The total direct labor cost, at an average rate of $10 per hour for direct labor, was one and one-half times the direct materials cost. Factory overhead was applied on the basis of $4 per direct labor hour. What was the total actual factory overhead incurred for the period? (Hint: First solve for direct labor cost and then for direct labor hours.)arrow_forwardCoops Stoops estimated its annual overhead to be $85,000 and based its predetermined overhead rate on 24,286 direct labor hours. At the end of the year, actual overhead was $90,000 and the total direct labor hours were 24,100. What is the entry to dispose of the over applied or under applied overhead?arrow_forwardADJUSTING ENTRIES INCLUDING ADJUSTMENT FOR UNDERAPPLIED/OVERAPPLIED FACTORY OVERHEAD Prepare the December 31 adjusting journal entries for Keiser Company. Data are as follows: (a) Factory overhead is applied at a rate of 80% of direct labor costs. At the end of the year, the direct labor costs associated with the jobs still in process totaled 7,000. (b) A physical count of factory supplies at the end of the year shows that 3,750 of factory supplies were used during the year. (c) A review of the insurance policy files shows that 4,360 of insurance on the factory building and equipment has expired. (d) Depreciation expense for the year on the factory building was 9,400 and on factory equipment was 11,600, a total of 21,000. (e) The factory overhead account has a debit balance of 146,700 and a credit balance of 143,200 [after recording adjustments (a) through (d)]. Use Cost of Goods Sold for this adjustment. Was factory overhead underapplied or overapplied for the year?arrow_forward
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