7. Applying overhead and disposing of the factory overhead balance Aa Aa Carenta

Question

7. Applying overhead and disposing of the factory overhead balance Aa Aa Carentan Corp. has the following data related to its factory overhead costs for the year that just ended. Activity Bases are measured in Direct Labor Hours (DLH) Estimated Factory Overhead Estimated Activity Base in DLH Actual Activity Base in DLH $563,200 25,600 27,400 Actual Overhead Costs for the Year: Depreciation on factory equipment Property taxes on manufacturing facility Factory utilities Manufacturing supervisors' salaries Other indirect labor Indirect materials Tota $284,000 20,500 41,500 184,400 45,100 38,500 $614,000 What is the amount of factory overhead that Carentan Corp. should have applied to products during the year? $563,200 $636,480 $614,000o $602,800 O Based on the data previously provided, what amount of overapplied or underapplied overhead will Carentan Corp have at the end of the year? $11,200 underapplied $1,800 underapplied O $1,800 overapplied $11,200 overapplied Suppose the company has overapplied overhead at the end of the year in the amount of $28,525 Record the entry to dispose of the factory overhead balance at December 31. Use Smart Entry when selection lists are not available JOURNAL Post. Date Description Ref Debit Credit Dec 31 Not sure about the account title? Click here to view the chart of accounts.

Explanation / Answer

Solution:

7)

a)

The amount of factory overhead cost that Carentan Corp. should have applied to production during the year = Standard factory overhead based on actual activity

= $563,200 / 25,600 x 27,400

= 602,800

b)

Since Estimated Factory Overheads Applied $602,800 are less than actual factory overheads $614,000, the Factory Overheads are Under-applied $11,200 ($614,000 - $602,800)

c)

Since factory overheads are under-applied $11,200

The following entry is to be passed to dispose of Under-applied factory overhead

Debit

Credit

Work In Process Dr.

Finished Goods Dr.

Cost of Goods Sold Dr.

   To Manufacturing Overheads Under-applied

$11,200

Here, the detail of accounts are not given, we assumed that whatever goods are manufactured as sold. No Work In Process Ending Inventory and No Finished Goods Ending Inventory.

Hence, amount should be debited to Cost of Goods Sold.

Debit

Credit

Cost of Goods Sold Dr.

$11,200

   To Manufacturing Overheads Under-applied

$11,200

Please ask separate question for next part...

Debit

Credit

Work In Process Dr.

Finished Goods Dr.

Cost of Goods Sold Dr.

   To Manufacturing Overheads Under-applied

$11,200

Related Questions

Navigate

• Browse (All)
• Browse 7
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.