Almeda Products, Inc., uses a job-order costing system. During the year, the fol

Question

Almeda Products, Inc., uses a job-order costing system. During the year, the following transactions were completed: a. Raw materials were issued from the storeroom for use in production, $181,900 (80% direct and 20% indirect). b. Employee salaries and wages were accrued as follows: direct labor, $198,800; indirect labor, $82,300; and selling and administrative salaries, $89,400. c. Utility costs were incurred in the factory, $66,200. d. Advertising costs were incurred, $98,400. e. Insurance costs, $21,300 (90% related to factory operations, and 10% related to selling and administrative activities). f. Depreciation was recorded, $180,100 (85% related to factory assets, and 15% related to selling and administrative assets). g. Manufacturing overhead was applied to jobs at the rate of 170% of direct labor cost. h. Goods that cost $701,200 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. i. Sales for the year totaled $1,390,000. The total cost to manufacture these goods according to their job cost sheets was $718,500 1Determine the underapplied or overapplied overhead for the year. (Omit the "$" sign in your response.) 2Prepare an income statement for the year. (Hint: No calculations are required to determine the cost ofgoods sold before any adjustment for underapplied or overapplied overhead.) (Input all amounts as positive values. Omit the "$" sign in your response.)

Explanation / Answer

I believe your question is to find the underapplied/overapplied factory overhead for the year. a. Raw materials were issued from the storeroom for use in production, $181,900 (80% direct and 20% indirect). DOES NOT AFFECT FACTORY OVERHEAD b. Employee salaries and wages were accrued as follows: direct labor, $199,300; indirect labor, $82,800; and selling and administrative salaries, $89,300. DEBIT FACTORY OVERHEAD FOR INDIRECT LABOR c. Utility costs were incurred in the factory, $66,700. DEBIT FACTORY OVERHEAD FOR FACTORY UTILITIES d. Advertising costs were incurred, $99,600. PERIOD COSTS - DOES NOT AFFECT FACTORY OVERHEAD e. Insurance costs, $20,500 (90% related to factory operations, and 10% related to selling and administrative activities). DEBIT FACTORY OVERHEAD FOR 90% OF INSURANCE COSTS f. Depreciation was recorded, $181,100 (85% related to factory assets, and 15% related to selling and administrative assets). DEBIT FACTORY OVERHEAD FOR 85% OF DEPRECIATION COSTS g. Manufacturing overhead was applied to jobs at the rate of 170% of direct labor cost. CREDIT FACTORY OVERHEAD FOR 170%*199300 h. Goods that cost $701,300 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. NO AFFECT ON FACTORY OVERHEAD i. Sales for the year totaled $1,200,000. The total cost to manufacture these goods according to their job cost sheets was $720,000. NO AFFECT ON FACTORY OVERHEAD DEBIT CREDIT 82800 66700 18450 153935 338810 16925 (BALANCE) Therefore, factory over has a balance 16925 (OVERAPPLIED)

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