3.Balloons, Inc. had actual overhead costs of S162,000 and budgeted overhead cos

Question

3.Balloons, Inc. had actual overhead costs of S162,000 and budgeted overhead costs of $178,500 for 2011. Balloons applied overhead based on machine hours. Actual and budgeted machine hours for 2011 were 20,000 and 21,000, respectively. For 2011, Balloons had B.overapplied overhead of $16,500 If factory overhead is underapplied for the year, overapplied overhead of $8,000 C. D. underapplied overhead of $8,000 underapplied overhead of $16,500 4. cost of goods sold will be decreased when factory overhead is closed. actual overhead costs are greater than applied overhead factory overhead has a credit balance before being closed. all of the above A. C. 5.Which of the following statements pertaining to job order costing is(are) TRUE? I.The issuance of indirect materials from the storeroom is recorded on job cost sheets II. Overapplied manufacturing overhead can be properly disposed of with a debit to Cost of Goods Sold and a credit to Manufacturing Overhead. The total cost of all job cost sheets at a particular point in time should equal the balance in the Work-in-Process Inventory III. I only II only C. D. IIIonly I, II and III A.

Explanation / Answer

3 Predetermined overhead rate = 178500/21000=$8.5 per MH Overhead applied = 20000*8.5 = $170000 Overapplied overhead = 170000-162000 = $8000 Option A is correct 4 If factory overhead is underapplied, actual overhead costs are greater than applied overhead Option B is correct 5 The issuance of indirect materials from the storeroom is recorded on job cost sheets. Option A is correct

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