Click here to get an A+ paper at a Discount
|
Savallas Company is highly automated and uses computers to control manufacturing operations. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of computer-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year: |
| Computer-hours | 85,000 | |
| Fixed manufacturing overhead cost | $ | 1,275,000 |
| Variable manufacturing overhead per computer-hour | $ | 3.00 |
|
|
||
|
During the year, a severe economic recession resulted in cutting back production and a buildup of inventory in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year: |
| Computer-hours | 60,000 | |
| Manufacturing overhead cost | $ | 1,350,000 |
| Inventories at year-end: | ||
| Raw materials | $ | 400,000 |
| Work in process | $ | 160,000 |
| Finished goods | $ | 1,040,000 |
| Cost of goods sold | $ | 2,800,000 |
|
|
||
| Required: |
| 1. |
Compute the company’s predetermined overhead rate for the year. |
| Predetermined overhead rate | $ per hour | |
| 2. |
Compute the underapplied or overapplied overhead for the year. (Input the amount as a positive value.) |
| (Click to select)UnderappliedOverapplied overhead cost | $ |
| 3.1 |
Assume the company closes any underapplied or overapplied overhead directly to Cost of Goods Sold. Prepare the appropriate journal entry. |
| General Journal | Debit | Credit |
| (Click to select)Cost of goods soldManufacturing overheadRaw materialsSalaries expenseAccounts payableWork in processDepreciation expenseFinished goods | ||
| (Click to select)Depreciation expenseWork in processAccounts payableCost of goods soldManufacturing overheadFinished goodsSalaries expenseRaw materials |
