College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
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Chapter 27, Problem 1SEA
- (a) Factory overhead is applied at a rate of 60% of direct labor costs. At the end of the year, the direct labor costs associated with the jobs still in process totaled $8,000.
- (b) A physical count of factory supplies at the end of the year shows that $5,100 of factory supplies were used during the year.
- (c) A review of the insurance policy files shows that $6,500 of insurance on the factory building and equipment has expired.
- (d)
Depreciation expense for the year on the factory building was $9,000 and on factory equipment was $13,500, a total of $22,500. - (e) The factory overhead account has a debit balance of $187,600 and a credit balance of $189,500 [after recording adjustments (a) through (d)]. Use Cost of Goods Sold for this adjustment.
Was factory overhead under- or overapplied for the year?
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In its first year of operation, Oriole Printing Shop estimated manufacturing overhead costs and activity in order to determine a
predetermined overhead rate. At year end, March 31, overhead was over-applied by $3,400. It has been decided this over-applied
overhead is material at the end of the year and the amount should be allocated among work in process 13%, finished goods 26%, and
the rest to the cost of goods sold. Prepare the adjusting entry to close out the over-applied overhead. (List all debit entries before
credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Date Account Titles and Explanation
Dec. 31
I
Debit
Credit
A manufacturing company applies factory overhead based on direct labor hours. At the
beginning of the year, it estimated that factory overhead costs would be $404,064 and direct
labor hours would be 44,896. Actual factory overhead costs incurred were $436,743, and
actual direct labor hours were 50,549. What is the amount of overapplied or underapplied
manufacturing overhead at the end of the year?
Oa. $18,198 overapplied
Ob. $454,941 overapplied
Oc. $18,198 underapplied
Od. $50,877 underapplied
Lakeshore Company allocates overhead using direct labour-hours. For 2020, the estimated and actual labour-hours were 182,000 and 168,000 respectively, and the predetermined overhead rate used to apply overhead for the year was $24.40 per direct labour-hour. The manufacturing overhead control T-account showed a credit balance of $184,600 at the end of the year, and this balance was disposed of at the end of the year by closing it to cost of goods sold.
Required:
1. Was manufacturing overhead under- or overapplied?
multiple choice 1
Underapplied
Overapplied
2. Compute the actual overhead amount incurred over the year.
Actual Overhead
3. How will end-of-period disposal of this amount impact net income?
multiple choice 2
Increase
Decrease
Chapter 27 Solutions
College Accounting, Chapters 1-27
Ch. 27 - Under the perpetual inventory system, Cost of...Ch. 27 - Prob. 2TFCh. 27 - On the spreadsheet, the factory overhead account...Ch. 27 - Prob. 4TFCh. 27 - The adjustment for factory overhead applied to...Ch. 27 - LO2 The adjustment for the amount of factory...Ch. 27 - The adjustment for depreciation expense for the...Ch. 27 - At the end of the accounting period, a credit...Ch. 27 - Prob. 4MCCh. 27 - Prob. 5MC
Ch. 27 - LO2 Prepare adjusting entries at December 31 for J...Ch. 27 - Prob. 2CECh. 27 - Prob. 3CECh. 27 - Prob. 1RQCh. 27 - Prob. 2RQCh. 27 - Prob. 3RQCh. 27 - Prob. 4RQCh. 27 - Prob. 5RQCh. 27 - What are the distinctive features of ToyJoys...Ch. 27 - Prob. 7RQCh. 27 - Prob. 8RQCh. 27 - Prob. 9RQCh. 27 - ADJUSTING ENTRIES INCLUDING ADJUSTMENT FOR...Ch. 27 - Prob. 2SEACh. 27 - Prob. 3SEACh. 27 - CLOSING JOURNAL ENTRIES Prepare closing journal...Ch. 27 - REVERSING JOURNAL ENTRIES Prepare reversing...Ch. 27 - SPRE ADSHEET, ADJUSTING ENTRIES, AND FIN ANCIAL...Ch. 27 - FINANCIAL STATEMENTS The adjusted trial balance...Ch. 27 - ADJUSTING. CLOSING. AND REVERSING ENTRIES A...Ch. 27 - ADJUSTING ENTRIES INCLUDING ADJUSTMENT FOR...Ch. 27 - Prob. 2SEBCh. 27 - ADJUSTING JOURNAL ENTRIES FOR A MANUFACTURING...Ch. 27 - Prob. 4SEBCh. 27 - REVERSING ENTRIES Prepare reversing journal...Ch. 27 - SPREADSHEET, ADJUSTING ENTRIES, AND FINANCIAL...Ch. 27 - FINANCIAL STATEMENTS The adjusted trial balance...Ch. 27 - Prob. 8SPBCh. 27 - Prob. 1MYWCh. 27 - Reese Manufacturing Company manufactures and sells...Ch. 27 - Drafts of the condensed income statement and...
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- ADJUSTING 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_forwardThe actual overhead for a company is $74,539. Overhead was based on 6,000 direct labor hours and was $2,539 under applied for the year. What is the overhead application rate per direct labor hour? What is the journal entry to dispose of the under applied overhead?arrow_forwardNelson Fabrication Inc. had a remaining credit balance of $20,000 in its under- and overapplied factory overhead account at year-end. The balance was deemed to be large and, therefore, should be closed to Work in Process, Finished Goods, and Cost of Goods Sold. The year-end balances of these accounts, before adjustment, showed the following: Determine the prorated amount of the overapplied factory overhead that is chargeable to each of the accounts. Prepare the journal entry to close the credit balance in Under-and Overapplied Factory Overhead.arrow_forward
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