Answer:
a) $ 13000 under applied
b) Cost of goods sold $ 13,000 Debit
Factory Overhead $ 13000 Credit
Explanation:
Estimated Manufacturing overhead $252,000
Actual overhead $265,000
Estimated Direct labor hours 20,000
Actual direct labor hours 22,200
Actual overhead-Estimated Manufacturing overhead= $265,000 -$252,000
= $ 13000 under applied
When actual overhead is greater than estimated overhead then it under applied and if estimated overhead is greater than actual it is over applied.
Accounts affected by over and under applied overhead are cost of goods sold and work in process accounts.
The under applied overhead is debited to cost of goods sold account and Factory Overhead is credited to ensure the transfer of the remaining part of the factory overhead.
Similarly over applied overhead is credited to cost of goods sold account and Factory Overhead is debited to ensure the removal of the additional part of the factory overhead from cost of goods sold.
The entry in the above example would be
Cost of goods sold $ 13,000 Debit
Factory Overhead $ 13000 Credit
