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 19P
Nathan Industries had a remaining debit balance of $20,000 in its under- and overapplied factory
Required:
- 1. Prepare the closing entry for the $20,000 of underapplied overhead, assuming that the balance is not considered to be material.
- 2. Prepare the closing entry for the $20,000 of underapplied overhead, assuming that the balance is considered to be material.
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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
The Mystic Manufacturing Company's Factory Overhead T-account at the end of the fiscal
year shows Actual Overhead in the amount of $450,000 and Allocated Overhead in the
amount of $480,000.
REQUIRED: Which of the following is true in describing this Accounting scenario?
A) Overhead is under-applied by $30,000 and the journal entry to close out MOH would require
debiting Cost of Goods Sold (COGS)
B) Overhead is under-applied by $30,000 and the journal entry to close out MOH would require
crediting Cost of Goods Sold (COGS).
C) Overhead is over-applied by $30,000 and the journal entry to close out MOH would require
debiting Cost of Goods Sold (COGS).
D) Overhead is over-applied by $30,000 and the journal entry to close out MOH would require
crediting Cost of Goods Sold (COGS).
2.
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?
2. Compute the actual overhead amount incurred over the year.
3. How will end-of-period disposal of this amount impact net income?
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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- Nelson 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_forwardHousley Paints Co. had a remaining debit balance of $25,000 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 underapplied factory overhead that is chargeable to each of the accounts. Prepare the journal entry to close the debit balance in Under-and Overapplied Factory Overhead.arrow_forwardAt 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_forward
- If 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_forwardDavidson Company's manufacturing overhead account showed a $6,200 under-allocated balance on December 31, 2019. Other accounts showed the following balances on December 31, 2019: Materials inventory $50,000 WIP inventory $30,000 Finished goods inventory $20,000 COGS $100,000 Davidson adjusts COGS for the balance in manufacturing overhead. The balance in COGS after closing out the balance in manufacturing overhead is:arrow_forwardCALCULATOR PRINTER VERSION 1 BACK NEXT Problem 4-30 Coronado, Inc. manufactures ergonomically designed computer furniture. Coronado uses a job order costing system. On November 30, the Work in Process Inventory consisted of the following jobs: Job No. Item Units Accumulated Cost CC723 Computer caddy 25,000 $970,000 CH291 Chair 18,000 432,000 PS812 Printer stand 25,000 251,000 $1,653,000 On November 30, Coronado's Raw Materials Inventory account totaled $679,000, and its Finished Goods Inventory totaled $3,495,400. Coronado applies manufacturing overhead on the basis of machine hours. The company's manufacturing overhead budget for the year totaled $4,600,000, and the company planned to use 920,000 machine hours during the year. Through the first eleven months of the year, the company used a total of 836,000 machine hours, total manufacturing overhead amounted to $4,284,500, and Cost of Goods Sold was $4,294,500. Coronado purchased $8,750,250 in raw materials in December and incurred…arrow_forward
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