At the end of January, the overhead account of BULLDOG cOMPANY is as follows: Ov

Question

At the end of January, the overhead account of BULLDOG cOMPANY is as follows: Overhead 49 40 The balance in BULLDOG COMPANY'S inventory and selected related accounts at Tanuary 31 are Work in process $7 If BULLDOG COMPANY's under- or over-applied overhead is considered to be insignificant or immaterial in amount, by what amount we would increase or decrease (specify which) each of the following accounts by 31. Work in process 32. Finished goods 33. Cost of goods sold. 34. Overhead If BULLDOG COMPANY'S under-or over-applied overhead is considered ta be significant on material in amount, by what amount we would increase or decrease (specify which) each of the following accounts by 35. Work in process 36. Finished goods 37. Cost of goods sold.. 38. Overhead..

Explanation / Answer

Note: Since overhead has debit balance of $9 (49Dr- 40Cr) , its underapplied and allocated in ratio of their respective balance overhead was applied for signficant case.

In case of underapplied, and insignificant following account is affected: 31 Work in process NE 32 Finished goods NE 33 Cost of goods sold $9 + 34 Overhead $9 - In case of underapplied, and significant following account is affected: 35 Work in process $       0.90 + 36 Finished goods $       1.80 + 37 Cost of goods sold $       6.30 + 38 Overhead $       9.00 -

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