compute the underapplied or overhead and assume that the company closes any unde

Question

compute the underapplied or overhead and assume that the company closes any underapplied or overapplied overhead to cost of goods sold. prepare the appropriate journal entry.
assume that the company allocates any underapplied or overapplied overhead proportionally to work in process, finished goods, and cost of good sold. prepare the appropriate journal entry.
how much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to work in process, finished goods, and cost of goods sold rather than being closed to cost of goods sold?

Help Save & Exit Check my 1 Luzadis Company makes furniture using the latest automated technology. The company uses a job-order cost manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a formula that estimates $680.000 of total manufacturing overhead for an estimated activity level of 85.000 machine-hours cost During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year 4:31 Machine-hours Manufacturing overhead cost Inventories at year-end: 76,808 $ 637,80e Raw materials Work in process (includes overhead applied of s36,480) Finished goods Kincludes overhead applied of $91, 200) 5 28,808 S 115,880 289,588 1,524,780 Cost of goods sold (includes overhead applied of $480,320) Required: 1. Compute the underapplied or overapplied overhead 2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry me that the company allocates any underapplied or overapplited overhead proportionally to Work in Process, Finished Goods and Cost of Goods Sold. Prepare the appropriate journal entry 4. How m Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold? if the underapplied or overapplied overhead is allocated to Work in Process, undera uch higher or lower will net operating income be Dell Update 1 update is ready to Octals Complete this question by entering your answers in the tabs below x? Excel Cproduct Activat trAVG AntiVins e Connect . Google ch X1 Book1-Excel dProduc," ments Ea

Explanation / Answer

Requirement 1 overhead rare = Estimated MOH/Estimated MH's 680,000/85000 8 Mh's Applied overhead (8*76000 Actual mhs')= 608000 Actual manufacturing overhead 637,000 Under Applied overhead 29,000 Answer Requirement 2 Event General Journal Debit Credit Cost of goods sold 29,000 Manufacturing overhead 29,000 Requirement 3 Event General Journal Debit Credit work in process inventory 1,740 finished goods inventory 4,350 cost of goods sold 22,910 Manufacturing overhead 29,000 Allocation Work in process = 115,800/(115,800+289,500+1524700) 6% Finished goods = 289,500/(115800+289500+1524700) 15% cost of goods sold= 79% hence allocated amount in terms of percentage WIP 29000*9% 1740 29000*15% 4350 29000*79% 22910 4) net income will be higher   6,090 if the underapplied overhead is allocated rather than closed entirely to cost of goods sold

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