Exam 6: Absorption Costing and Variable Costing

Melillo Corporation has provided data concerning the company's Manufacturing Overhead account for the month of October.Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold,the total of the debits to the Manufacturing Overhead account was $67,000 and the total of the credits to the account was $57,000.Which of the following statements is true?

Sanker Inc.has provided the following data for the month of August.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. Work In Finished Cost of Process Goods Goods Sold Total Direct materials............. \ 2,790 \ 7,680 \ 18,240 \ 28,710 Direct labor................... 9,700 19,200 45,600 74,500 Manufacturing overhead applied.......................... Total............................. Manufacturing overhead for the month was overapplied by $5,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts. -The work in process inventory at the end of August after allocation of any underapplied or overapplied overhead for the month is closest to:

Molano Corporation has provided the following data concerning manufacturing overhead for June: Actual manufacturing overhead incurred \6 9,000 Manufacturing overhead applied to Work in Process \7 6,000 The company's Cost of Goods Sold was $255,000 prior to closing out its Manufacturing Overhead account.The company closes out its Manufacturing Overhead account to Cost of Goods Sold.Which of the following statements is true?

Beaver Company used a predetermined overhead rate last year of $2 per direct labor-hour,based on an estimate of 25,000 direct labor-hours to be worked during the year.Actual costs and activity during the year were: Actual manufacturing overhead cost incurred \4 7,000 Actual direct labor-hours worked 24,000 The underapplied or overapplied overhead last year was:

Jupiter Inc.has provided the following data for the month of August.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. Work In Finished Cost of Process Goods Goods Sold Total Direct materials............. \1 ,730 \ 10,00 \ 26,200 \ 37,930 Direct labor................... 2,250 16,000 41,920 60,170 Manufacturing overhead applied.......................... Total............................. Manufacturing overhead for the month was underapplied by $2,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts. -The journal entry to record the allocation of any underapplied or overapplied overhead for August would include the following:

Danoff Corporation has provided data concerning the company's Manufacturing Overhead account for the month of October.Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold,the total of the debits to the Manufacturing Overhead account was $68,000 and the total of the credits to the account was $77,000.Which of the following statements is true?

The most common accounting treatment of underapplied manufacturing overhead is to transfer it to the Manufacturing Overhead control account.

Alvernaz Inc.has provided the following data for the month of April.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. Work In Finished Cost of Process Goods Goods Sold Total Direct materials............. \ 7,440 \ 13,300 \ 35,150 \ 55,890 Direct labor................... 7,560 18,200 48,100 73,860 Manufacturing overhead applied.......................... Total............................. Manufacturing overhead for the month was overapplied by $2,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts. -The journal entry to record the allocation of any underapplied or overapplied overhead for April would include the following:

Gowin Inc.has provided the following data for the month of September.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. Work In Finished Cost of Process Goods Goods Sold Total Direct materials............. \ 2,750 \ 16,530 \ 118,610 \ 137,890 Direct labor................... 1,140 9,690 69,530 80,360 Manufacturing overhead applied.......................... Total............................. Manufacturing overhead for the month was overapplied by $13,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts. -The finished goods inventory at the end of September after allocation of any underapplied or overapplied overhead for the month is closest to:

Gowin Inc.has provided the following data for the month of September.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. Work In Finished Cost of Process Goods Goods Sold Total Direct materials............. \ 2,750 \ 16,530 \ 118,610 \ 137,890 Direct labor................... 1,140 9,690 69,530 80,360 Manufacturing overhead applied.......................... Total............................. Manufacturing overhead for the month was overapplied by $13,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts. -The journal entry to record the allocation of any underapplied or overapplied overhead for September would include the following:

Ivory Company uses a job-order costing system.What year-end journal entry could Ivory make to dispose of (close out)$4,150 of overapplied manufacturing overhead cost?

Sanker Inc.has provided the following data for the month of August.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. Work In Finished Cost of Process Goods Goods Sold Total Direct materials............. \ 2,790 \ 7,680 \ 18,240 \ 28,710 Direct labor................... 9,700 19,200 45,600 74,500 Manufacturing overhead applied.......................... Total............................. Manufacturing overhead for the month was overapplied by $5,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts. -The journal entry to record the allocation of any underapplied or overapplied overhead for August would include the following:

Jupiter Inc.has provided the following data for the month of August.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. Work In Finished Cost of Process Goods Goods Sold Total Direct materials............. \1 ,730 \ 10,00 \ 26,200 \ 37,930 Direct labor................... 2,250 16,000 41,920 60,170 Manufacturing overhead applied.......................... Total............................. Manufacturing overhead for the month was underapplied by $2,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts. -The finished goods inventory at the end of August after allocation of any underapplied or overapplied overhead for the month is closest to:

Ades Inc.has provided the following data for the month of July.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. Work In Finished Cost of Process Goods Goods Sold Total Direct materials............. \ 2,380 \ 14,520 \ 62,700 \ 79,600 Direct labor................... 1,440 13,200 57,000 71,640 Manufacturing overhead applied.......................... Total............................. Manufacturing overhead for the month was underapplied by $5,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts. Required: Provide the journal entry that would record the allocation of underapplied or overapplied among work in process,finished goods,and cost of goods sold.

Chaffey Inc.has provided the following data for the month of January.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. Work In Finished Cost of Process Goods Goods Sold Total Direct materials............. \ 3,140 \ 18.00 \ 100,080 \ 121,220 Direct labor................... 1,310 15,00 83,400 99,710 Manufacturing overhead applied.......................... Total............................. Manufacturing overhead for the month was underapplied by $7,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts. The work in process inventory at the end of January after allocation of any underapplied or overapplied overhead for the month is closest to:

Rinks Inc.has provided the following data for the month of December.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. Work In Finished Cost of Process Goods Goods Sold Total Direct materials............. \ 5,850 \ 14,880 \ 105,840 \ 126,570 Direct labor................... 7,020 18,600 132,300 157,920 Manufacturing overhead applied.......................... Total............................. Manufacturing overhead for the month was underapplied by $1,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts. The journal entry to record the allocation of any underapplied or overapplied overhead for December would include the following:

The balance in White Company's Work in Process inventory account was $15,000 on August 1 and $18,000 on August 31.The company incurred $30,000 in direct labor cost during August and requisitioned $25,000 in raw materials (all direct material).If the sum of the debits to the Manufacturing Overhead account total $28,000 for the month,and if the sum of the credits totaled $30,000,then:

Wandrie Inc.has provided the following data for the month of October.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. Work In Finished Cost of Process Goods Goods Sold Total Direct materials............. \ 6,320 \ 15,860 \ 80,080 \ 102,260 Direct labor................... 5,450 15,250 77,000 97,700 Manufacturing overhead applied.......................... Total............................. Manufacturing overhead for the month was overapplied by $3,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts. The cost of goods sold for October after allocation of any underapplied or overapplied overhead for the month is closest to:

Roofe Inc.has provided the following data for the month of October.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. Work In Finished Cost of Process Goods Goods Sold Total Direct materials............. \ 23,900 \ 16,800 \ 112,840 \ 133,540 Direct labor................... 1,310 12,000 80,600 93,910 Manufacturing overhead applied.......................... Total............................. Manufacturing overhead for the month was underapplied by $2,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts. -The cost of goods sold for October after allocation of any underapplied or overapplied overhead for the month is closest to:

Dagnon Corporation uses direct labor-hours in its predetermined overhead rate.At the beginning of the year,the total estimated manufacturing overhead was $299,130.At the end of the year,actual direct labor-hours for the year were 17,400 hours,manufacturing overhead for the year was overapplied by $13,850,and the actual manufacturing overhead was $294,130.The predetermined overhead rate for the year must have been closest to: