Exercise 11-33 Journal Entries for Overhead (Appendix A) (LO 11-8) Starlight Gla

Question

Exercise 11-33 Journal Entries for Overhead (Appendix A) (LO 11-8) Starlight Glassware Company has the following standards and flexible-budget data. Standard variable-overhead Standard quantity of direct Budgeted fixed overhead $100,000 per direct-labor hour hours per unit of output $7.00 rate labor Budgeted output 25,000 units Actual results for February are as follows: 20,000 units $348,000 $ 98,000 Actual output Actual variable Actual fixed Actual direct labor overhead overhead 48,000 hours Required: Prepare journal entries for the following transactions. (lf no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Record the incurrence of actual variable overhead and actual fixed overhead. Add variable and fixed overhead to Work-in-Process Inventory. Close underapplied or overapplied overhead into Cost of Goods Sold View transaction list

Explanation / Answer

JOURNAL ENTRIES S.NO. ACCOUNTS TITLE AND EXPLANATION DEBIT $ CREDIT $ 1 Manufacturing Overheads Dr. 446000     Accounts payable 446000 (for incurrence of Ohs on account) 2 Work in Process Inventory Dr. 432000      Manufacturing Overheads 432000 (for manufacturing OH applied on 48000 hours at rate of $9 per hour) 3 Cost of goods sold Dr. 14000     Manufacturing Overheads 14000 (for under-applied overheads to cost of goods sold) Note: Pre-determined OH rate is computed as follows: Variable OH rate 7 per hour Fixed OH rate (Budgeted OH / Budgeted MH =100,000/50,000 MH) 2 per hour Pre-determined OH rate 9 per hour

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