Determining the amount of underapplied or overapplied manufacturing overhead
Order ID:89JHGSJE83839 Style:APA/MLA/Harvard/Chicago Pages:5-10 Instructions:
Determining the amount of underapplied or overapplied manufacturing overhead
QUESTION 1
Determining the amount of underapplied or overapplied manufacturing overhead
Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials):
Determining the amount of underapplied or overapplied manufacturing overhead
Selling expenses $ 210,000 Purchases of raw materials $ 266,000 Direct labor ? Administrative expenses $ 159,000 Manufacturing overhead applied to work in process $ 372,000 Actual manufacturing overhead cost $ 357,000
Inventory balances at the beginning and end of the year were as follows:
Beginning of Year End of Year Raw materials $ 52,000 $ 38,000 Work in process ? $ 23,000 Finished goods $ 35,000 ?
The total manufacturing costs for the year were $675,000; the cost of goods available for sale totaled $725,000; the unadjusted cost of goods sold totaled $664,000; and the net operating income was $30,000. The company’s underapplied or overapplied overhead is closed to Cost of Goods Sold.
Required:
Prepare schedules of cost of goods manufactured and cost of goods sold and an income statement. (Hint: Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.)
QUESTION 2
Osborn Manufacturing uses a predetermined overhead rate of $19.20 per direct labor-hour. This predetermined rate was based on a cost formula that estimates $249,600 of total manufacturing overhead for an estimated activity level of 13,000 direct labor-hours.
The company actually incurred $247,000 of manufacturing overhead and 12,500 direct labor-hours during the period.
Required:
- Determine the amount of underapplied or overapplied manufacturing overhead for the period.
- Assume that the company’s underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the journal entry to dispose of the underapplied or overapplied overhead increase or decrease the company’s gross margin? By how much?
QUESTION 3
The following cost data relate to the manufacturing activities of Chang Company during the just completed year:
Manufacturing overhead costs incurred: Indirect materials $ 16,700 Indirect labor 147,000 Property taxes, factory 9,700 Utilities, factory 87,000 Depreciation, factory 273,900 Insurance, factory 11,700 Total actual manufacturing overhead costs incurred $ 546,000 Other costs incurred: Purchases of raw materials (both direct and indirect) $ 417,000 Direct labor cost $ 77,000 Inventories: Raw materials, beginning $ 21,700 Raw materials, ending $ 31,700 Work in process, beginning $ 41,700 Work in process, ending $ 71,700 The company uses a predetermined overhead rate of $26 per machine-hour to apply overhead cost to jobs. A total of 21,400 machine-hours was used during the year.
Required:
- Compute the amount of underapplied or overapplied overhead cost for the year.
- Prepare a schedule of cost of goods manufactured for the year.
Determining the amount of underapplied or overapplied manufacturing overhead
QUESTION 4
Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,275,000 in manufacturing overhead cost at an activity level of 570,000 machine-hours.
The company spent the entire month of January working on a large order for 12,400 custom-made machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow:
- Raw materials purchased on account, $321,000.
- Raw materials used in production, $261,000 (80% direct materials and 20% indirect materials).
- Labor cost accrued in the factory, $162,000 (one-third direct labor and two-thirds indirect labor).
- Depreciation recorded on factory equipment, $62,500.
- Other manufacturing overhead costs incurred on account, $85,600.
- Manufacturing overhead cost was applied to production on the basis of 40,870 machine-hours actually worked during the month.
- The completed job for 12,400 custom-made machined parts was moved into the finished goods warehouse on January 31 to await delivery to the customer. (In computing the dollar amount for this entry, remember that the cost of a completed job consists of direct materials, direct labor, and appliedoverhead.)
Required:
- Prepare journal entries to record items (a) through (f) above [ignore item (g) for the moment].
- Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant items from your journal entries to these T-accounts.
- Prepare a journal entry for item (g) above.
- If 10,900 of the custom-made machined parts are shipped to the customer in February, how much of this job’s cost will be included in cost of goods sold for February?
RUBRIC
Excellent Quality
95-100%
Introduction 45-41 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Literature Support
91-84 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Methodology
58-53 points
Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score
50-85%
40-38 points
More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.
83-76 points
Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.
52-49 points
Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality
0-45%
37-1 points
The background and/or significance are missing. No search history information is provided.
75-1 points
Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.
48-1 points
There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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