When jobs are completed, the total cost of the job is recorded as a debit to Fin

Question

When jobs are completed, the total cost of the job is recorded as a debit to Finished goods and a credit to Work in process. When jobs are completed, the total cost of the job is recorded as a debit to Finished goods and a credit to Work in process. During 2012, a company incurs $500,000 of manufacturing overhead costs and allocates out $492,000 of manufacturing costs. Overhead costs have been underallocated. Overallocated manufacturing overhead occurs when the manufacturing overhead allocated to work in process inventory is less than the amount actually incurred.

Explanation / Answer

17./

TRUE,

JOURNAL ENTRY WILL BE

FINISHED GOODS INVENTORY..................................DR

   WORK IN PROCESS INVENTORY

18./

TRUE,

JOURNAL ENTRY WILL BE

FINISHED GOODS INVENTORY..................................DR

   WORK IN PROCESS INVENTORY

19./

TRUE,

ACTUAL OVER HEAD INCURRED = $500000

LESS ALLOCATED = ($492000)

UNDER ALLOCATION OF OVERHEAD = $8000

20./

FALSE,

OVERALLOCATED MANUFACTURING OVERHEAD OCCURS WHEN THE MANUFACTURING OVERHEAD ALLOCATED TO WORK IN PROCESS INVENTORY IS MORE THAN THE AMOUNT ACTUALLY INCURRED.

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