Answer:
Latta Company
1.
(a) is the Actual Manufacturing Overhead Expense incurred for the year.
(b) is the Manufacturing overhead applied to Work in Process for the year.
(c) is the Cost of goods manufactured for the year.
(d) is the Cost of goods sold for the year.
2. Debit Cost of Goods Sold $70,000
Credit Manufacturing Overhead $70,000
To close the underapplied overhead to cost of goods sold.
3. Debit Work in Process $3,500
Finished Goods $10,500
Cost of goods sold $56,000
Credit Manufacturing Overhead $70,000
To close the underapplied overhead to the 3 accounts.
Explanation:
a) Data and Calculations:
1. T-accounts:
Manufacturing Overhead
Debit Credit
(a) 460,000 (b) 390,000
Bal. 70,000
Work in Process
Debit Credit
Bal. 15,000 (c) 710,000
260,000
85,000
(b) 390,000
Bal. 40,000
Finished Goods
Debit Credit
Bal. 50,000 (d) 640,000
(c) 710,000
Bal. 120,000
Cost of Goods Sold
Debit Credit
(d) 640,000
2. Distribution of overhead applied to production:
Work in Process, ending $ 19,500
Finished Goods, ending 58,500
Cost of Goods Sold 312,000
Overhead applied $ 390,000
3. Allocation of Underapplied:
Work in Process, ending $3,500 (19,500/390,000 * 70,000)
Finished Goods, ending 10,500 (58,500/390,000 * 70,000)
Cost of Goods Sold 56,000 (312,000/390,000 * 70,000)
Underapplied overhead $70,000
