Question

Please hep me solve this thank you!Tevebaugh Corporation is a manufacturer that uses job-order costing. The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year. The company has supplied the following data for the just completed year:Beginning inventories: Finished goods $ 30,000 Estimated total manufacturing overhead at the beginning of the year $ 568,000 Estimated direct labor-hours at the beginning of the year 32,000 direct labor-hoursResults of operations:Raw materials (all direct) requisitioned for use in production $ 501,000 Direct labor cost $ 683,000 Actual direct labor-hours 33,000 direct labor-hoursManufacturing overhead: Indirect labor cost $ 176,000 Other manufacturing overhead costs incurred $ 420,000 Selling and administrative: Selling and administrative salaries $ 219,000 Other selling and administrative expenses $ 346,000 Cost of goods manufactured $ 1,567,000 Sales revenue $ 2,498,000 Cost of goods sold (unadjusted) $ 1,376,000 The net operating income is:Garrison 16e Rechecks 2017-08-28Multiple Choice$892,750$765,750$546,750$1,111,750

Answer 1

Answer:

$546,750

Explanation:

Sales                  2,498,000

COGS                (1,376,000)

gross profit        1,  112,000

S&A salaries        (219,000)

other S&A           (346,000)

underapplied MO  (10,250) *

net income           536.750‬

*we need to compare the actual voerhead with the applied overhead:

actual overhead: 176,000 + 420,000 = 596,000

applied overhead:

overhead rate:

$\frac{Cost\: Of \:Manufacturing \:Overhead}{Cost \:Driver}= Overhead \:Rate$

568,000 / 32,000 = 17.75

33,000 x 17.75 = 585.750

      overhead

debit              credit

596,000    585,750

                    10,250 underapplied overhead

As the applied was lower it is underapplied we need to recognzie more cot thus, the net income decrease.