1. Estimated overhead and direct labor costs for the year were $117,500 and $125

Question

1. Estimated overhead and direct labor costs for the year were $117,500 and $125,500, respectively. During the year, actual overhead was $107,900 and actual direct labor cost was $115,800. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include (Round predetermined overhead rate to nearest whole percentage.):

A.  A credit to Factory Overhead for $952.

B.  A debit to Cost of Goods Sold for $952.

C. A credit to Cost of Goods Sold for $952.

D.  A debit to Goods in Process Inventory for $952.

E.  A credit to Finished Goods Inventory for $952.

2. If one unit of Product X used $2.30 of direct materials and $3.10 of direct labor, sold for $11.00, and was assigned overhead at the rate of 28% of direct labor costs, how much gross profit was realized from this sale?

A. $4.73.

B. $.87.

C. $11.00.

D. $5.40.

E.   $2.30.

Explanation / Answer

1

A.  A credit to Factory Overhead for $952.

2

A. $4.73.

Multiply direct labor costs of $3.10 by 28% to determine overhead amount.

Add all costs: $2.30 + $2.10 + overhead(3.10 *2.8) =6.628

Now subtract from sold cost = 11-6.268 = 4.732 = 4.73

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