Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Chapter 4, Problem 19P
Nathan Industries had a remaining debit balance of $20,000 in its under- and overapplied factory overhead account at year-end. It also had year-end balances in the following accounts:
Required:
- 1. Prepare the closing entry for the $20,000 of underapplied overhead, assuming that the balance is not considered to be material.
- 2. Prepare the closing entry for the $20,000 of underapplied overhead, assuming that the balance is considered to be material.
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Students have asked these similar questions
The Mystic Manufacturing Company's Factory Overhead T-account at the end of the fiscal
year shows Actual Overhead in the amount of $450,000 and Allocated Overhead in the
amount of $480,000.
REQUIRED: Which of the following is true in describing this Accounting scenario?
A) Overhead is under-applied by $30,000 and the journal entry to close out MOH would require
debiting Cost of Goods Sold (COGS)
B) Overhead is under-applied by $30,000 and the journal entry to close out MOH would require
crediting Cost of Goods Sold (COGS).
C) Overhead is over-applied by $30,000 and the journal entry to close out MOH would require
debiting Cost of Goods Sold (COGS).
D) Overhead is over-applied by $30,000 and the journal entry to close out MOH would require
crediting Cost of Goods Sold (COGS).
Davidson Company's manufacturing overhead account
showed a $6,200 under-allocated balance on December
31, 2019. Other accounts showed the following balances on
December 31, 2019:
Materials inventory
$50,000
WIP inventory
$30,000
Finished goods inventory
$20,000
COGS
$100,000
Davidson adjusts COGS for the balance in manufacturing
overhead. The balance in COGS after closing out the
balance in manufacturing overhead is:
Lakeshore Company allocates overhead using direct labour-hours. For 2020, the estimated and actual labour-hours were 182,000 and 168,000 respectively, and the predetermined overhead rate used to apply overhead for the year was $24.40 per direct labour-hour. The manufacturing overhead control T-account showed a credit balance of $184,600 at the end of the year, and this balance was disposed of at the end of the year by closing it to cost of goods sold.
Required:
1. Was manufacturing overhead under- or overapplied?
multiple choice 1
Underapplied
Overapplied
2. Compute the actual overhead amount incurred over the year.
Actual Overhead
3. How will end-of-period disposal of this amount impact net income?
multiple choice 2
Increase
Decrease
Chapter 4 Solutions
Principles of Cost Accounting
Ch. 4 - What are factory overhead expenses, and what...Ch. 4 - What are three categories of factory overhead...Ch. 4 - What are the distinguishing characteristics of...Ch. 4 - When a products cost is composed of fixed and...Ch. 4 - What effect does a change in volume have on total...Ch. 4 - Distinguish between a step-variable cost and a...Ch. 4 - What is the basic premise underlying the high-low...Ch. 4 - What are the advantages and disadvantages of the...Ch. 4 - Differentiate between an independent variable and...Ch. 4 - Prob. 10Q
Ch. 4 - What is a flexible budget, and how can management...Ch. 4 - How does accounting for factory overhead differ in...Ch. 4 - What is the function and use of each of the two...Ch. 4 - What are two types of departments found in a...Ch. 4 - What are the two most frequently used methods of...Ch. 4 - When using the sequential distribution method of...Ch. 4 - When using the sequential distribution method of...Ch. 4 - Is it possible to close the total factory overhead...Ch. 4 - What are the shortcomings of waiting until the...Ch. 4 - What are the two types of budget data needed to...Ch. 4 - Prob. 21QCh. 4 - What factory operating conditions and data are...Ch. 4 - Prob. 23QCh. 4 - How does activity-based costing differ from...Ch. 4 - What steps must a company take to successfully...Ch. 4 - What is the relationship between activity-based...Ch. 4 - Prob. 27QCh. 4 - Prob. 28QCh. 4 - If the factory overhead control account has a...Ch. 4 - Prob. 30QCh. 4 - Classify each of the following items of factory...Ch. 4 - Ames Automotive Company has accumulated the...Ch. 4 - Prob. 3ECh. 4 - Using the data in E4-2 and spreadsheet software,...Ch. 4 - El Paso Products Company has accumulated the...Ch. 4 - Computing unit costs at different levels of...Ch. 4 - Identifying basis for distribution of service...Ch. 4 - A manufacturing company has two service and two...Ch. 4 - A manufacturing company has two service and two...Ch. 4 - Compute the total job cost for each of the...Ch. 4 - Classify each of the following items of factory...Ch. 4 - Job 25AX required 5,000 for direct materials,...Ch. 4 - Job 19AB required 10,000 for direct materials,...Ch. 4 - Match each of the following cost pools with the...Ch. 4 - The books of Petry Products Co. revealed that the...Ch. 4 - The general ledger of Lawson Lumber Co. contains...Ch. 4 - Nelson Fabrication Inc. had a remaining credit...Ch. 4 - Housley Paints Co. had a remaining debit balance...Ch. 4 - The cost behavior patterns below are lettered A...Ch. 4 - Miller Minerals Co. manufactures a product that...Ch. 4 - Scattergraph method Using the data in P4-2 and a...Ch. 4 - Using the data in P4-2 and Microsoft Excel: 1....Ch. 4 - Listed below are the budgeted factory overhead...Ch. 4 - Menlo Materials is divided into five departments,...Ch. 4 - Distribution of service department costs to...Ch. 4 - Journalizing the distribution of service...Ch. 4 - Channel Products Inc. uses the job order cost...Ch. 4 - Determining job costcalculation of predetermined...Ch. 4 - Focus Fabrication Co. uses ABC. The factory...Ch. 4 - Mansfield Manufacturing Co. uses ABC. The factory...Ch. 4 - Hughes Products Inc. uses a job order cost system....Ch. 4 - Abbey Products Company is studying the results of...Ch. 4 - The following information, taken from the books of...Ch. 4 - Rockford Company has four departmental accounts:...Ch. 4 - Luna Manufacturing Inc. completed Job 2525 on May...Ch. 4 - Phillips Products, Inc. had a remaining credit...Ch. 4 - Nathan Industries had a remaining debit balance of...Ch. 4 - Chrome Solutions Company manufactures special...Ch. 4 - Activity-based Costing
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- Phillips Products, Inc. had a remaining credit balance of $10,000 in its under- and overapplied factory overhead account at year-end. It also had year-end balances in the following accounts: Required: Prepare the closing entry for the $10,000 of overapplied overhead, assuming that the balance is not considered to be material. Prepare the closing entry for the $10,000 of overapplied overhead, assuming that the balance is considered to be material.arrow_forwardNelson Fabrication Inc. had a remaining credit balance of $20,000 in its under- and overapplied factory overhead account at year-end. The balance was deemed to be large and, therefore, should be closed to Work in Process, Finished Goods, and Cost of Goods Sold. The year-end balances of these accounts, before adjustment, showed the following: Determine the prorated amount of the overapplied factory overhead that is chargeable to each of the accounts. Prepare the journal entry to close the credit balance in Under-and Overapplied Factory Overhead.arrow_forwardHousley Paints Co. had a remaining debit balance of $25,000 in its under- and overapplied factory overhead account at year-end. The balance was deemed to be large and, therefore, should be closed to Work in Process, Finished Goods, and Cost of Goods Sold. The year-end balances of these accounts, before adjustment, showed the following: Determine the prorated amount of the underapplied factory overhead that is chargeable to each of the accounts. Prepare the journal entry to close the debit balance in Under-and Overapplied Factory Overhead.arrow_forward
- At the end of the fiscal year, there s a relatively minor balance in the factory overhead account. What procedure can be used for disposing of the balance in the accountarrow_forwardIf the factory overhead control account has a credit balance of 2,000 at the end of the first month of the fiscal year, has the overhead been under- or overapplied for the month? What are some probable causes for the credit balance?arrow_forward2. Lakeshore Company allocates overhead using direct labour-hours. For 2020, the estimated and actual labour-hours were 182,000 and 168,000 respectively, and the predetermined overhead rate used to apply overhead for the year was $24.40 per direct labour-hour. The manufacturing overhead control T-account showed a credit balance of $184,600 at the end of the year, and this balance was disposed of at the end of the year by closing it to cost of goods sold. Required: 1. Was manufacturing overhead under- or overapplied? 2. Compute the actual overhead amount incurred over the year. 3. How will end-of-period disposal of this amount impact net income?arrow_forward
- CALCULATOR PRINTER VERSION 1 BACK NEXT Problem 4-30 Coronado, Inc. manufactures ergonomically designed computer furniture. Coronado uses a job order costing system. On November 30, the Work in Process Inventory consisted of the following jobs: Job No. Item Units Accumulated Cost CC723 Computer caddy 25,000 $970,000 CH291 Chair 18,000 432,000 PS812 Printer stand 25,000 251,000 $1,653,000 On November 30, Coronado's Raw Materials Inventory account totaled $679,000, and its Finished Goods Inventory totaled $3,495,400. Coronado applies manufacturing overhead on the basis of machine hours. The company's manufacturing overhead budget for the year totaled $4,600,000, and the company planned to use 920,000 machine hours during the year. Through the first eleven months of the year, the company used a total of 836,000 machine hours, total manufacturing overhead amounted to $4,284,500, and Cost of Goods Sold was $4,294,500. Coronado purchased $8,750,250 in raw materials in December and incurred…arrow_forwardThe actual overhead for a company is $79,534. Overhead was based on 7,000 direct labor hours and was $2,534 underapplied for the year. A. What is the overhead application rate per direct labor hour? $fill in the blank 340074ff501f023_1 per direct labor hour B. What is the journal entry to dispose of the underapplied overhead? If an amount box does not require an entry, leave it blank. fill in the blank fill in the blank fill in the blank fill in the blankarrow_forwardExercise 3-8 Applying Overhead; Journal Entries; Disposing of Underapplied or Overapplied Overhead (LO3-1, LO3-2, LO3-4] The following information is taken from the accounts of Latta Company. The entries in the T-accounts are summaries of the transactions that affected those accounts during the year. Manufacturing Overhead 497,664 (b) 82,944| Work in Process 6,280 (c) 316,000 93,000 414,720 56,000 Finished Goods 34,000 | (d) 774,000 136,000 (а) 414,720 Bal. 774,000 672,000 Bal. (c) Bal. Bal. (b) Bal. Cost of Goods Sold (d) 672,000|| The overhead that had been applied to production during the year is distriputed among Work in Process, Finished Goods, and Cost of Goods Sold as of the end of the year as follows: Work in Process, ending Finished Goods, ending Cost of Goods Sold $ 26,880 65,280 322,560 $ 414,720 Overhead appliedarrow_forward
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