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Bas_tet [7]
3 years ago
11

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that fa

ctory overhead costs would be $362,655 and direct labor hours would be 40,295. Actual factory overhead costs incurred were $445,098, and actual direct labor hours were 51,516. What is the amount of overapplied or underapplied manufacturing overhead at the end of the year
Business
1 answer:
yawa3891 [41]3 years ago
5 0

Answer:

Under/over applied overhead= $18,546 overallocated

Explanation:

Giving the following information:

Estimated factory overhead costs= $362,655

Estimated direct labor hours= 40,295.

Actual factory overhead costs incurred were $445,098, and actual direct labor hours were 51,516

Firsts, we need to calculate the predetermined overhead rate:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 362,655/40,295

Estimated manufacturing overhead rate= $9 per direct labor hour

Now, we need to allocate overhead:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 9*51,516= $463,644

Finally, we determine the under/over allocated overhead:

Under/over applied overhead= real overhead - allocated overhead

Under/over applied overhead= 445,098 - 463,644= $18,546 overallocated

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Maquoketa Services was formed on May 1, 2017. The following transactions took place during the first month.
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Answer:

1. Jay BradFord invested $40,000 cash in the company, as its sole owner.

Account                     Debit          Credit

Cash                          $40,000

Capital                                          $40,000

2. Hired two employees to work in the warehouse. They will each be paid a salary of $3,050 per month.

Account                     Debit          Credit

Wage Expense         $3,050

Wages Payable                           $3,050

3. Signed a 2-year rental agreement on a warehouse; paid $24,000 cash in advance for the first year.

Account                     Debit          Credit

Prepaid Rent             $24,000

Cash                                              $24,000

4. Purchased furniture and equipment costing $30,000. A cash payment of $10,000 was made immediately; the remainder will be paid in 6 months.

Account                                Debit          Credit

Furniture and Equipment   $30,000

Cash                                                        $10,000

Accounts Payable                                  $10,000

5. Paid $1,800 cash for a one-year insurance policy on the furniture and equipment.

Account                                Debit          Credit

Prepaid Insurance               $1,800

Cash                                                        $1,800

6. Purchased basic office supplies for $420 cash.

Account                                Debit          Credit

Office supplies                    $420

Cash                                                         $420

7. Purchased more office supplies for $1,500 on account.

Account                                Debit          Credit

Supplies                               $1,500

Accounts Payable                                   $1,500

8. Total revenues earned were $20,000—$8,000 cash and $12,000 on account.

Account                                Debit          Credit

Revenue                                                  $20,000

Cash                                     $8,000

Accounts Receivable          $12,000

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Account                                Debit          Credit

Accounts Payable                $400

Cash                                                         $400

10. Received $3,000 from customers in payment of accounts receivable.

Account                                Debit          Credit

Accounts Receivable                              $3,000

Cash                                     $3,000

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Account                                Debit          Credit

Utility Expense                    $380

Accounts Payable                                   $380

12. Paid the monthly salaries of the two employees, totaling $6,100.

Account                     Debit          Credit

Wage Expense                            $3,050

Wages Payable         $3,050

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3. Lubricants used for machine maintenance.

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Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $7,400 cash and
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Answer:

Pose-for-Pics

1. T-accounts:

Cash

Date     Account Title               Debit     Credit

Aug. 1   Common stock       $7,400

Aug. 2  Prepaid insurance                   $3,000

Aug. 5  Office supplies                             970

Aug. 20 Photography Fees   4,231

Aug. 31 Utilities                                         765

Aug. 31 Balance                                  $6,896

Common Stock

Date     Account Title        Debit     Credit

Aug. 1   Cash                                 $7,400

Aug. 1   Photography equipment 34,400

Aug. 31 Balance             $41,800

Photography Equipment

Date     Account Title        Debit     Credit

Aug. 1   Common stock    $34,400

Prepaid Insurance

Date     Account Title        Debit     Credit

Aug. 1   Cash                   $3,000

Office Supplies

Date     Account Title        Debit     Credit

Aug. 1   Cash                    $970

Photography Fees

Date      Account Title        Debit     Credit

Aug. 20 Cash                                 $4,231

Utilities Expense

Date     Account Title        Debit     Credit

Aug. 31 Cash                    $765

2. Trial Balance

As of August 31

Account Title          Debit     Credit

Cash                     $6,896

Common stock                   $41,800

Equipment           34,400

Prepaid insurance 3,000

Office supplies         970

Photography fees                  4,231

Utilities expense      765

Totals                $46,031   $46,031

           

Explanation:

Before transactions are posted to the T-accounts (General Ledger) they are recorded in the General Journal.  The T-accounts summarize the transactions into various ledger accounts.  Periodically, the accounts are balanced and a trial balance is extracted to check if the posting is error-free.

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