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Chapter 17: Q19E-d (page 943)

Selected cost data for Classic Print Co. are as follows:

Estimated manufacturing overhead cost for the year

$125,000

Estimated direct labor cost for the year

78,125

Actual manufacturing overhead cost for the year

116,000

Actual direct labor cost for the year

67,000

Requirements

4. Prepare the journal entry to adjust for the under allocated or overallocated manufacturing overhead.

Short Answer

Expert verified

Date

Particulars

Debit($)

Credit ($)

Cost of goods sold

8,800

Manufacturing overhead

8,800

Step by step solution

01

Underallocation overhead

Under allocation of overhead is defined as the situation in which the allocated overhead is less than the actual overhead incurred by the company during the year.

02

The Underallocated overhead amount

Underallocationoverhead=Actualoverhead-Allocatedoverhead=$116,000-$107,200=$8,800

It is recorded in the books of the company by debiting the cost of goods sold and by crediting the manufacturing overhead.

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Most popular questions from this chapter

The manufacturing records for Sporty Kayaks at the end of the 2018 fiscal year show the following information about manufacturing overhead:

Overhead allocated to production

\(409,200

Actual manufacturing overhead cost

432,000

Predetermined overhead allocation rate

\)44 per machine hours

Requirements

3. Prepare the journal entry to adjust for the underallocated or overallocated manufacturing overhead.

Distinguishing between job order costing and process costing

Would the following companies most likely use job order costing or process costing?

g. A cell phone manufacturer

The manufacturing records for Sporty Kayaks at the end of the 2018 fiscal year show the following information about manufacturing overhead:

Overhead allocated to production

\(409,200

Actual manufacturing overhead cost

432,000

Predetermined overhead allocation rate

\)44 per machine hours

Requirements

2. Was manufacturing overhead overallocated or underallocated for the year, and by how much?

Question: Record the following journal entries for Smith Company:

6. Purchased raw materials on account, \(10,000.

7. Used \)6,000 in direct materials and \(500 in indirect materials in production.

8. Incurred \)8,000 in labor costs, of which 80% was direct labor.

Question: Analyze the following T-accounts, and describe each lettered transaction. Note that some transactions may be compound entries.

Raw material inventory

(a)

(b)

Work in process inventory

(b)

(f)

(c )

(e )

Finished goods inventory

(f)

(g)

Prepaid insurance

(d)

Account payable

(a)

Wages payable

(c)

Manufacturing overhead

(b)

(e)

(c )

(h)

(d)

Cost of goods sold

(g)

(h)
See all solutions

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