Answer:
Answer:
1. Overhead over applied= $521,000
2. Factory Overhead Dr. $ 521,000
Cost Of Goods Sold Cr. $ 521,000
3. Work in Process, (ratio) $521,000 * 7%= 36,470
Finished Goods, $521,000 * 19%= 98,990
Cost of Goods Sold $521,000 * 74%= 385,540
Total $521,000 100%
4. Difference between the two CGS= $ 136,060
Explanation:
Predetermined Overhead Costs $1,152,000
Estimated activity level of 72,000 machine-hours
Overhead rate= $ 1152,000/ 72,000= $ 16 per hour
Manufacturing overhead cost $551,000
Actual hours = 67,000
Overhead applied to WIP = 67,000 * 16= $ 1072,000
Overhead over applied= $ 1072,000 - $551000= $521,000
Part 2:
Factory Overhead Dr. $ 521,000
Cost Of Goods Sold Cr. $ 521,000
The Cost of Goods Sold is credited and Factory overhead is debited.
Part 3:
Suppose the overhead is applied in the following ratio
Work in Process, (ratio) $37,520 7% (37520/536,00*100%)
Finished Goods, $101,840 19% (101840/536,00*100%)
Cost of Goods Sold $396, 640 74% (396,640/536,00*100%)
Total $536,000 100%
The overhead over applied would be allocated in the following way applying the same ratio as determined above.
Work in Process, (ratio) $521,000 * 7%= 36,470
Finished Goods, $521,000 * 19%= 98,990
Cost of Goods Sold $521,000 * 74%= 385,540
Total $521,000 100%
Part 4:
Cost of Goods Sold ( overhead applied of $396, 640) $1,472,600
Less Overhead overapplied $ 521,000
CGS = $ 951,000
Cost of Goods Sold (overhead applied to WIP & FG) $1,472,600
Less Overapplied Overhead $ 385,540
CGS= $ 1087,060
Difference between the two CGS = $ 1087,060- $ 951,000= $ 136,060
