I am stuck on calculating the Over/Under-applied Overhead for the T-Accounts for
ID: 2512097 • Letter: I
Question
I am stuck on calculating the Over/Under-applied Overhead for the T-Accounts for Cost of Goods Sold (??????????? - 8and Manufacturing Overhead (??????????? - 8). All others answers I have entered appear to be correct for all other questions and table entries. Please explain work so I understand what I am doing wrong.
Lisburn Plastic Products Company makes a plastic toy using two departments: parts and assembly. The following data pertain to the parts department’s transactions in 2018:
1. The beginning balance in the Work in Process Inventory account was $10,000. This inventory consisted of parts for 2,000 toys. The beginning balances in the Raw Materials Inventory, Production Supplies, and Cash accounts were $97,500, $1,000, and $200,000, respectively.
2. Direct materials costing $90,000 were issued to the parts department. The materials were sufficient to make 6,000 additional toys.
3. Direct labor cost was $80,000, and indirect labor costs were $6,000. All labor costs were paid in cash.
4. The predetermined overhead rate was $0.30 per direct labor dollar.
5. Actual overhead costs other than production supplies and indirect labor for the year were $18,250, which was paid in cash.
6. The parts department completed work for 6,400 toys. The remaining toy parts were 25 percent complete. The completed parts were transferred to the assembly department.
7. All of the production supplies had been used by the end of 2018.
8. Over- or underapplied overhead was closed to the Cost of Goods Sold account.
Determine the number of equivalent units of production.
Equivalent units 6800
((beg unit prod) 2000 + (mat sup for prod) 6000) – (comp toys) 6400 + ((% comp) .25 * (rem toys) 1600)
Determine the product cost per equivalent unit.
Cost per equivalent unit 30
((beg inv) 10000 + (dir mat) 90000 + (dir lab) 80000 + ((oh per labor) .30 * (dir lab) 80000)) / (equ units) 6800
Calculate the total cost allocated between the ending work in process inventory and parts transferred to the assembly department.
To the assembly department 192000 (comp toys) 6400 * (cost per equ unit) 30
To ending work-in-process inventory 12000 ((% comp) .25 * (rem toys) 1600) * 30
Total allocated costs 204000
Record the transactions in a partial set of T-accounts.
Cash
Cash
Begin Bal 200000 86000 3 18250 5 End Bal 97750 Raw Mat Begin Bal 97500 90000 2 End Bal 7500 Work in Process Parts Begining Bal 10000 2 90000 192600 6 3 80000 4 24000 End Bal 12000 Work in Process Assembly Begining Bal 0 6 192000 End Bal 192000 Production Supplies Begining Bal 1000 1000 7 End Bal 0 Cost of Goods Sold Begining Bal 0 8 ??????????? End Bal ??????????? ??????????? Manufacturing Overhead Begining Bal 0 3 6000 24000 4 5 18250 ??????????? 8 7 1000 End Bal ??????????? ???????????Explanation / Answer
All the entries are correct except entry 6 which shall be debited to cost of goods sold - Parts Dept.instead of Work-in-Process -- Assembly Department.
The manufacturing overhead t-account is also correct.
The debit side of the account totals to $25,250 (actual overhead incured)
The credit side of the account totals to $24,000 (overhead applied )
The difference between these two $1,250 is the underapplied ovehread which will come in the entry 8.
The final manufacturing overhead account ill look as follows.
Manufacturing overhead account will be closed and no balance need to be carried forward.
The cost of goods sold account will look like below.
Manufacturing Overhead Ref Debit Credit Ref Beg.Bal. 0 3 6000 24000 4 5 18250 1250 8 7 1000 25250 25250 End.Bal. 0Related Questions
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