Almeda Products, Inc., uses a job-order costing system. During the year, the fol

Question

Almeda Products, Inc., uses a job-order costing system. During the year, the following transactions were completed:

a.
Raw materials were issued from the storeroom for use in production, $181,900 (80% direct and 20% indirect).
b.
Employee salaries and wages were accrued as follows: direct labor, $199,300; indirect labor, $82,800; and selling and administrative salaries, $89,300.
c. Utility costs were incurred in the factory, $66,700.
d. Advertising costs were incurred, $99,600.
e.
Insurance costs, $20,500 (90% related to factory operations, and 10% related to selling and administrative activities).
f.
Depreciation was recorded, $181,100 (85% related to factory assets, and 15% related to selling and administrative assets).
g. Manufacturing overhead was applied to jobs at the rate of 170% of direct labor cost.
h.
Goods that cost $701,300 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.
i.
Sales for the year totaled $1,200,000. The total cost to manufacture these goods according to their job cost sheets was $720,000.

Explanation / Answer

I found the error! I did not see the indirect materials in part a. Calculation edited below! I believe your question is to find the underapplied/overapplied factory overhead for the year. a. Raw materials were issued from the storeroom for use in production, $181,900 (80% direct and 20% indirect). DEBIT FACTORY OVERHEAD FOR 20% OF MATERIALS ISSUED b. Employee salaries and wages were accrued as follows: direct labor, $199,300; indirect labor, $82,800; and selling and administrative salaries, $89,300. DEBIT FACTORY OVERHEAD FOR INDIRECT LABOR c. Utility costs were incurred in the factory, $66,700. DEBIT FACTORY OVERHEAD FOR FACTORY UTILITIES d. Advertising costs were incurred, $99,600. PERIOD COSTS - DOES NOT AFFECT FACTORY OVERHEAD e. Insurance costs, $20,500 (90% related to factory operations, and 10% related to selling and administrative activities). DEBIT FACTORY OVERHEAD FOR 90% OF INSURANCE COSTS f. Depreciation was recorded, $181,100 (85% related to factory assets, and 15% related to selling and administrative assets). DEBIT FACTORY OVERHEAD FOR 85% OF DEPRECIATION COSTS g. Manufacturing overhead was applied to jobs at the rate of 170% of direct labor cost. CREDIT FACTORY OVERHEAD FOR 170%*199300 h. Goods that cost $701,300 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. NO AFFECT ON FACTORY OVERHEAD i. Sales for the year totaled $1,200,000. The total cost to manufacture these goods according to their job cost sheets was $720,000. NO AFFECT ON FACTORY OVERHEAD DEBIT 36380 82800 66700 18450 153935 CREDIT 338810 19455 (DEBIT BALANCE) Therefore, factory over has a balance 19455 (UNDERAPPLIED) Hope this helps!

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