Inventories Raw materials $ 43,000 $ 52,000

Work in process 10,200 21,300

Finished goods 63,000 35,600

Activities and information for May

Raw materials purchases (paid with cash) 210,000

Factory payroll (paid with cash) 345,000

Factory overhead Indirect materials 15,000

Indirect labor 80,000

Other overhead costs 120,000

Sales (received in cash) 1,400,000

Predetermined overhead rate based on direct labor cost 70 % Determine whether there is over or underapplied overhead. Prepare the journal entry to allocate (close) overapplied or underapplied overhead to Cost of Goods Sold.

Question

Tomas Williams

Business

25 January, 04:51

Inventories Raw materials $ 43,000 $ 52,000

Work in process 10,200 21,300

Finished goods 63,000 35,600

Activities and information for May

Raw materials purchases (paid with cash) 210,000

Factory payroll (paid with cash) 345,000

Factory overhead Indirect materials 15,000

Indirect labor 80,000

Other overhead costs 120,000

Sales (received in cash) 1,400,000

Predetermined overhead rate based on direct labor cost 70 % Determine whether there is over or underapplied overhead. Prepare the journal entry to allocate (close) overapplied or underapplied overhead to Cost of Goods Sold.

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Answers (1)

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Mohammed · Answer 1

Overhead:

Indirect materials 15,000.00

Indirect labor 80,000.00

Other overhead costs 120,000.00

If we sum up everything = 215,000.00

Overhead applied 185,500.00

Underapplied OH 215000-185500=29,500.00