Clopack Company manufactures one product that goes through one processing depart

Question

Clopack Company manufactures one product that goes through one processing department called Mixing. All raw materials are introduced at the start of work in the Mixing Department. The company uses the weighted-average method to account for units and costs. Its Work in Process T-account for the Mixing Department for June follows (all forthcoming questions pertain to June):

WORK IN PROCESS - MIXING DEPARTMENT

June 1 balance 28,000 Completed and transferred ?
Materials 120,000 to Finished Goods
Direct labor 79,500
Overhead
97,000

The June 1 work in process inventory consisted of 5,000 pounds with $16,000 in materials cost and $12,000 in conversion cost. The June 1 work in process inventory was 100% complete with respect to materials and 50% complete with respect to conversion. During June 37,500 pounds were started into production. The June 30 work in process inventory consisted of 8,000 pounds that were 100% complete with respect to materials and 40% complete with respect to conversion.


Required:
Prepare the journal entry to record the overhead cost applied to production

Explanation / Answer

Flagler Company allocates overhead based on machine hours. They estimated overhead costs for the year to be $420,000. Estimated machine hours were 50,000. Actual hours and costs for the year were 46,000 machine hours and $380,000 of overhead. Required: a. Calculate the overhead application rate for the year. $420,000 / 50,000 = $8.40 / hour b. What is the amount of applied overhead for the year? 46,000 X $8.40 = $386,400 c. What is the amount of under or overapplied overhead for the year? Indicate whether it is over- or underapplied. $386,400 - $380,000 = $6,400 Over Applied The following account appears in the ledger after only part of the postings have been completed for July, the first month of the current fiscal year: Work in Process Balance, July 1 60,200 Direct materials 147,000 Direct labor 120,000 Factory overhead is applied to jobs at the rate of 60% of direct labor cost. The actual factory overhead incurred for July was $75,000. Jobs completed during the month totaled $301,200. (a) Prepare the journal entries to record (1) the application of factory overhead to production during July and (2) the jobs completed during July. 1) Debit Work in Process $72,000 Credit Factory Overhead $72,000 (b) What is the balance of the factory overhead account on July 31? $75,000 - $72,000 = $3,000 (c) Was factory overhead overapplied or underapplied on July 31? Underapplied (d) Determine the cost of the unfinished jobs on July 31. $60,200 + $147,000 + $120,000 + $72,000 = $399,200 Zither Co. manufactures a product called Zens in a three-process series. All materials are introduced at the beginning of the first process. Zither uses the first-in, first-out method of inventory costing. Unit and cost data for the first process (Department A) for the month of October 2012 follow: Conversion Units Completion Cost Work in process inventory: October 1 12,000 60% $140,400 October 31 5,000 40% ? Started in October 14,000 Direct materials cost 106,400 Conversion cost 70,310 Completed in October 21,000 ?

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