Deck 6: Absorption Costing and Variable Costing

Question 1

Ivory Company uses a job-order costing system.What year-end journal entry could Ivory make to dispose of (close out)$4,150 of overapplied manufacturing overhead cost?

A) $\begin{array}{llcc} \text { Finished Goods} &\$4,150 \\ \text {Manufacturing Overhead }&&\$4,150\end{array}$

B) $\begin{array}{llcc} \text { Cost of Goods Sold} &\$4,150 \\ \text {Manufacturing Overhead }&&\$4,150\end{array}$

C) $\begin{array}{llcc} \text { Manufacturing Overhead} &\$4,150 \\ \text { Finished Goods }&&\$4,150\end{array}$

D) $\begin{array}{llcc} \text { Manufacturing Overhead} &\$4,150 \\ \text { Cost of Goods Sold }&&\$4,150\end{array}$

Answer 1

$\begin{array}{llcc} \text { Manufacturing Overhead} &\$4,150 \\ \text { Cost of Goods Sold }&&\$4,150\end{array}$

Question 2

Paul Company used a predetermined overhead rate during the year just completed of $3.50 per direct labor-hour,based on an estimate of 22,000 direct labor-hours to be worked during the year.Actual overhead cost and activity during the year were: $\begin{array}{llcc} \text { Actual manufacturing overhead cost incurred } &\$90,000 \\\text {Actual direct labor-hours worked } &25,000\end{array}$
The underapplied or overapplied overhead for the year would be:

A)$13,000 underapplied
B)$10,500 overapplied
C)$2,500 overapplied
D)$2,500 underapplied

Answer 2

$2,500 underapplied

Question 3

Niglio Inc.has provided the following data for the month of December.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$6,350 & \$ 16,940& \$ 40,480 & \$ 63,700 \\\text {Direct labor...................}&6,960 & 22,330&53,360&82,650 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{6,960} & \underline{15,080}& \underline{35,960} & \underline{58,000} \\\text {Total.............................}&\underline{ \$ 20,270} & \underline{ \$ 54,350} & \underline{ \$ 129,800} & \underline{\$ 204,420}\end{array}$ Manufacturing overhead for the month was underapplied by $10,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.
The finished goods inventory at the end of December after allocation of any underapplied or overapplied overhead for the month is closest to:

A)$56,950
B)$51,750
C)$51,691
D)$57,009

Answer 3

$56,950

Question 4

The most common accounting treatment of underapplied manufacturing overhead is to transfer it to the Manufacturing Overhead control account.

Question 5

Wandrie Inc.has provided the following data for the month of October.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$ 6,320 & \$ 15,860 & \$ 80,080 & \$ 102,260 \\\text {Direct labor...................}&5,450 & 15,250 & 77,000 & 97,700 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{5,840} & \underline{10,950}& \underline{56,210} & \underline{73,000} \\\text {Total.............................}&\underline{ \$ 17,610} & \underline{ \$ 42,060} & \underline{ \$ 213,290} & \underline{\$ 272,960}\end{array}$
Manufacturing overhead for the month was overapplied by $3,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.
The cost of goods sold for October after allocation of any underapplied or overapplied overhead for the month is closest to:

A)$215,600
B)$210,980
C)$210,290
D)$216,290

Question 6

Danoff Corporation has provided data concerning the company's Manufacturing Overhead account for the month of October.Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold,the total of the debits to the Manufacturing Overhead account was $68,000 and the total of the credits to the account was $77,000.Which of the following statements is true?

A)Actual manufacturing overhead incurred during the month was $77,000.
B)Manufacturing overhead applied to Work in Process for the month was $68,000.
C)Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $68,000.
D)Manufacturing overhead for the month was overapplied by $9,000.

Question 7

Melillo Corporation has provided data concerning the company's Manufacturing Overhead account for the month of October.Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold,the total of the debits to the Manufacturing Overhead account was $67,000 and the total of the credits to the account was $57,000.Which of the following statements is true?

A)Manufacturing overhead for the month was overapplied by $10,000.
B)Actual manufacturing overhead for the month was $67,000.
C)Manufacturing overhead applied to Work in Process for the month was $67,000.
D)Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $57,000.

Question 8

Mieras Inc.has provided the following data for the month of November.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$ 3,880 & \$ 11,440 & \$57,070& \$ 72,390 \\\text {Direct labor...................}&5,100 & 16,720& 83,410 &105,230 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{4,690} & \underline{10,720}& \underline{51,590} & \underline{67,000} \\\text {Total.............................}&\underline{ \$ 13,670} & \underline{ \$ 38,880} & \underline{ \$ 192,070} & \underline{\$ 244,620}\end{array}$ Manufacturing overhead for the month was underapplied by $2,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.
The journal entry to record the allocation of any underapplied or overapplied overhead for November would include the following:

A)credit to Work in Process of $140
B)debit to Work in Process of $140
C)credit to Work in Process of $13,670
D)debit to Work in Process of $13,670

Question 9

Dagnon Corporation uses direct labor-hours in its predetermined overhead rate.At the beginning of the year,the total estimated manufacturing overhead was $299,130.At the end of the year,actual direct labor-hours for the year were 17,400 hours,manufacturing overhead for the year was overapplied by $13,850,and the actual manufacturing overhead was $294,130.The predetermined overhead rate for the year must have been closest to:

A)$17.70
B)$17.19
C)$18.22
D)$16.90

Question 10

When closing overapplied manufacturing overhead to cost of goods sold,which of the following would be true?

A)Work in process will decrease.
B)Cost of goods sold will increase.
C)Net income will decrease.
D)Gross margin will increase.

Question 11

A credit balance in the Manufacturing Overhead account at the end of the year means that overhead was underapplied.

Question 12

The sum of all amounts transferred from the Work in Process account and into the Finished Goods account represents the Cost of Goods Manufactured for the period.

Question 13

Crimp Corporation uses direct labor-hours in its predetermined overhead rate.At the beginning of the year,the estimated direct labor-hours were 15,000 hours and the total estimated manufacturing overhead was $258,000.At the end of the year,actual direct labor-hours for the year were 13,100 hours and the actual manufacturing overhead for the year was $253,000.Overhead at the end of the year was:

A)$27,680 overapplied
B)$32,680 overapplied
C)$27,680 underapplied
D)$32,680 underapplied

Question 14

Rinks Inc.has provided the following data for the month of December.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$ 5,850 & \$ 14,880& \$ 105,840 & \$ 126,570 \\\text {Direct labor...................}&7,020 & 18,600&132,300 &157,920 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{4,500} & \underline{9,00}& \underline{61,500} & \underline{75,000} \\\text {Total.............................}&\underline{ \$ 17,370} & \underline{ \$ 42,480} & \underline{ \$ 229,640} & \underline{\$ 359,490}\end{array}$ Manufacturing overhead for the month was underapplied by $1,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.
The journal entry to record the allocation of any underapplied or overapplied overhead for December would include the following:

A)debit to Finished Goods of $120
B)credit to Finished Goods of $42,480
C)debit to Finished Goods of $42,480
D)credit to Finished Goods of $120

Question 15

If a company applies overhead to jobs on the basis of a predetermined overhead rate,a credit balance in the Manufacturing Overhead account at the end of any period means that:

A)more overhead cost has been charged to jobs than has been incurred during the period.
B)more overhead cost has been incurred during the period than has been charged to jobs.
C)the amount of overhead cost charged to jobs is greater than the estimated cost for the period.
D)the amount of overhead cost charged to jobs is less than the estimated overhead cost for the period.

Question 16

The balance in White Company's Work in Process inventory account was $15,000 on August 1 and $18,000 on August 31.The company incurred $30,000 in direct labor cost during August and requisitioned $25,000 in raw materials (all direct material).If the sum of the debits to the Manufacturing Overhead account total $28,000 for the month,and if the sum of the credits totaled $30,000,then:

A)Finished Goods was debited for $82,000 during the month.
B)Finished Goods was credited for $83,000 during the month.
C)Manufacturing Overhead was underapplied by $2,000 at the end of the month.
D)Finished Goods was debited for $85,000 during the month.

Question 17

Beaver Company used a predetermined overhead rate last year of $2 per direct labor-hour,based on an estimate of 25,000 direct labor-hours to be worked during the year.Actual costs and activity during the year were: $\begin{array}{llcc} \text { Actual manufacturing overhead cost incurred } &\$47,000 \\\text {Actual direct labor-hours worked } &24,000\end{array}$
The underapplied or overapplied overhead last year was:

A)$1,000 underapplied
B)$1,000 overapplied
C)$3,000 overapplied
D)$2,000 underapplied

Question 18

Which of the following situations always results in underapplied overhead?

A)actual overhead is greater than applied overhead
B)actual overhead is less than applied overhead
C)estimated overhead is greater than actual overhead
D)estimated overhead is less than actual overhead

Question 19

Waldvogel Corporation has provided data concerning the company's Manufacturing Overhead account for the month of April.Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold,the total of the debits to the Manufacturing Overhead account was $55,000 and the total of the credits to the account was $56,000.Which of the following statements is true?

A)Manufacturing overhead for the month was underapplied by $1,000.
B)Manufacturing overhead applied to Work in Process for the month was $56,000.
C)Actual manufacturing overhead incurred during the month was $56,000.
D)Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $55,000.

Question 20

Chaffey Inc.has provided the following data for the month of January.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$ 3,140 & \$ 18.00 & \$ 100,080 & \$ 121,220 \\\text {Direct labor...................}&1,310 & 15,00& 83,400 & 99,710 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{1,680} & \underline{8,400}& \underline{45,920} & \underline{56,000} \\\text {Total.............................}&\underline{ \$ 6,130} & \underline{ \$ 41,400} & \underline{ \$ 229,400} & \underline{\$ 276,930}\end{array}$ Manufacturing overhead for the month was underapplied by $7,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.
The work in process inventory at the end of January after allocation of any underapplied or overapplied overhead for the month is closest to:

A)$5,975
B)$6,340
C)$5,920
D)$6,285

Question 21

Jupiter Inc.has provided the following data for the month of August.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$1,730 & \$ 10,00 & \$ 26,200 & \$ 37,930 \\\text {Direct labor...................}&2,250 & 16,000&41,920 &60,170 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{1,860} & \underline{8,060}& \underline{21,080} & \underline{31,000} \\\text {Total.............................}&\underline{ \$5,840} & \underline{ \$ 34,060} & \underline{ \$ 89,200} & \underline{\$ 129,100}\end{array}$ Manufacturing overhead for the month was underapplied by $2,000.
The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

-The journal entry to record the allocation of any underapplied or overapplied overhead for August would include the following:

A)debit to Cost of Goods Sold of $89,200
B)credit to Cost of Goods Sold of $1,360
C)debit to Cost of Goods Sold of $1,360
D)credit to Cost of Goods Sold of $89,200

Question 22

The actual manufacturing overhead incurred at Huberty Corporation during January was $73,000,while the manufacturing overhead applied to Work in Process was $78,000.The company's Cost of Goods Sold was $349,000 prior to closing out its Manufacturing Overhead account.The company closes out its Manufacturing Overhead account to Cost of Goods Sold.Which of the following statements is true?

A)Manufacturing overhead was overapplied by $5,000;Cost of Goods Sold after closing out the Manufacturing Overhead account is $354,000
B)Manufacturing overhead was underapplied by $5,000;Cost of Goods Sold after closing out the Manufacturing Overhead account is $344,000
C)Manufacturing overhead was underapplied by $5,000;Cost of Goods Sold after closing out the Manufacturing Overhead account is $354,000
D)Manufacturing overhead was overapplied by $5,000;Cost of Goods Sold after closing out the Manufacturing Overhead account is $344,000

Question 23

Gowin Inc.has provided the following data for the month of September.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$ 2,750 & \$ 16,530 & \$ 118,610 & \$ 137,890 \\\text {Direct labor...................}&1,140 & 9,690& 69,530 &80,360 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{1,700} & \underline{10,200}& \underline{73,100} & \underline{85,000} \\\text {Total.............................}&\underline{ \$5,590} & \underline{ \$ 36,420} & \underline{ \$ 261,240} & \underline{\$ 303,250}\end{array}$ Manufacturing overhead for the month was overapplied by $13,000.
The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

-The finished goods inventory at the end of September after allocation of any underapplied or overapplied overhead for the month is closest to:

A)$34,859
B)$34,860
C)$37,981
D)$37,980

Question 24

Burkhammer Inc.has provided the following data for the month of August.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. Manufacturing overhead for the month was underapplied by $9,000.
The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.
Required:
Determine the cost of work in process,finished goods,and cost of goods sold AFTER allocation of the underapplied or overapplied overhead for the period.

Question 25

Sanker Inc.has provided the following data for the month of August.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$ 2,790 & \$ 7,680 & \$ 18,240 & \$ 28,710 \\\text {Direct labor...................}&9,700 &19,200& 45,600 &74,500 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{5,440} & \underline{8,000}& \underline{18,560} & \underline{32,000} \\\text {Total.............................}&\underline{ \$17,930} & \underline{ \$ 34,880} & \underline{ \$ 82,400} & \underline{\$ 135,210}\end{array}$ Manufacturing overhead for the month was overapplied by $5,000.
The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

-The journal entry to record the allocation of any underapplied or overapplied overhead for August would include the following:

A)debit to Finished Goods of $34,880
B)debit to Finished Goods of $1,250
C)credit to Finished Goods of $34,880
D)credit to Finished Goods of $1,250

Question 26

Roofe Inc.has provided the following data for the month of October.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$ 23,900 & \$ 16,800 & \$ 112,840 & \$ 133,540 \\\text {Direct labor...................}&1,310 & 12,000&80,600 &93,910 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{1,650} & \underline{7,150}& \underline{46,200} & \underline{55,000} \\\text {Total.............................}&\underline{ \$6,860} & \underline{ \$ 35,950} & \underline{ \$ 239,640} & \underline{\$ 282,450}\end{array}$ Manufacturing overhead for the month was underapplied by $2,000.
The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

-The journal entry to record the allocation of any underapplied or overapplied overhead for October would include the following:

A)credit to Finished Goods of $260
B)credit to Finished Goods of $35,950
C)debit to Finished Goods of $260
D)debit to Finished Goods of $35,950

Question 27

Roswick Inc.has provided the following data for the month of August.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$ 2,990 & \$ 10,560 & \$ 40,960 & \$ 54,510 \\\text {Direct labor...................}&4,720 & 17,160& 66,560 &88,440 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{3,290} & \underline{8,930}& \underline{34,780} & \underline{47,000} \\\text {Total.............................}&\underline{ \$11,00} & \underline{ \$ 36,650} & \underline{ \$ 142,300} & \underline{\$ 189,950}\end{array}$ Manufacturing overhead for the month was underapplied by $3,000. The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.
The journal entry to record the allocation of any underapplied or overapplied overhead for August would include the following:

A)debit to Cost of Goods Sold of $142,300
B)credit to Cost of Goods Sold of $2,220
C)credit to Cost of Goods Sold of $142,300
D)debit to Cost of Goods Sold of $2,220

Question 28

Gowin Inc.has provided the following data for the month of September.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$ 2,750 & \$ 16,530 & \$ 118,610 & \$ 137,890 \\\text {Direct labor...................}&1,140 & 9,690& 69,530 &80,360 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{1,700} & \underline{10,200}& \underline{73,100} & \underline{85,000} \\\text {Total.............................}&\underline{ \$5,590} & \underline{ \$ 36,420} & \underline{ \$ 261,240} & \underline{\$ 303,250}\end{array}$ Manufacturing overhead for the month was overapplied by $13,000.
The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

-The journal entry to record the allocation of any underapplied or overapplied overhead for September would include the following:

A)debit to Work in Process of $260
B)credit to Work in Process of $260
C)debit to Work in Process of $5,590
D)credit to Work in Process of $5,590

Question 29

Alvernaz Inc.has provided the following data for the month of April.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$ 7,440 & \$ 13,300 & \$ 35,150 & \$ 55,890 \\\text {Direct labor...................}&7,560 & 18,200& 48,100 &73,860 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{5,700} & \underline{8,740}& \underline{23,560} & \underline{38,000} \\\text {Total.............................}&\underline{ \$20,700} & \underline{ \$ 40,240} & \underline{ \$ 106,810} & \underline{\$ 167,750}\end{array}$ Manufacturing overhead for the month was overapplied by $2,000.
The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

-The work in process inventory at the end of April after allocation of any underapplied or overapplied overhead for the month is closest to:

A)$20,947
B)$20,400
C)$21,000
D)$20,453

Question 30

Roofe Inc.has provided the following data for the month of October.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$ 23,900 & \$ 16,800 & \$ 112,840 & \$ 133,540 \\\text {Direct labor...................}&1,310 & 12,000&80,600 &93,910 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{1,650} & \underline{7,150}& \underline{46,200} & \underline{55,000} \\\text {Total.............................}&\underline{ \$6,860} & \underline{ \$ 35,950} & \underline{ \$ 239,640} & \underline{\$ 282,450}\end{array}$ Manufacturing overhead for the month was underapplied by $2,000.
The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

-The cost of goods sold for October after allocation of any underapplied or overapplied overhead for the month is closest to:

A)$241,320
B)$237,960
C)$241,640
D)$237,640

Question 31

Alvernaz Inc.has provided the following data for the month of April.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$ 7,440 & \$ 13,300 & \$ 35,150 & \$ 55,890 \\\text {Direct labor...................}&7,560 & 18,200& 48,100 &73,860 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{5,700} & \underline{8,740}& \underline{23,560} & \underline{38,000} \\\text {Total.............................}&\underline{ \$20,700} & \underline{ \$ 40,240} & \underline{ \$ 106,810} & \underline{\$ 167,750}\end{array}$ Manufacturing overhead for the month was overapplied by $2,000.
The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

-The journal entry to record the allocation of any underapplied or overapplied overhead for April would include the following:

A)credit to Cost of Goods Sold of $1,240
B)credit to Cost of Goods Sold of $106,810
C)debit to Cost of Goods Sold of $106,810
D)debit to Cost of Goods Sold of $1,240

Question 32

Mcgarey Inc.has provided the following data for the month of November.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$ 1,970 & \$ 10,500& \$ 65,100 & \$77,570 \\\text {Direct labor...................}&3,150& 25,250& 125,550 &148,950 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{3,600} & \underline{11,700}& \underline{74,700} & \underline{90,000} \\\text {Total.............................}&\underline{ \$8,720} & \underline{ \$ 42,450} & \underline{ \$ 265,350} & \underline{\$ 316,520}\end{array}$ Manufacturing overhead for the month was underapplied by $12,000.
The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

-The journal entry to record the allocation of any underapplied or overapplied overhead for November would include the following:

A)debit to Work in Process of $8,720
B)debit to Work in Process of $480
C)credit to Work in Process of $480
D)credit to Work in Process of $8,720

Question 33

Mcgarey Inc.has provided the following data for the month of November.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$ 1,970 & \$ 10,500& \$ 65,100 & \$77,570 \\\text {Direct labor...................}&3,150& 25,250& 125,550 &148,950 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{3,600} & \underline{11,700}& \underline{74,700} & \underline{90,000} \\\text {Total.............................}&\underline{ \$8,720} & \underline{ \$ 42,450} & \underline{ \$ 265,350} & \underline{\$ 316,520}\end{array}$ Manufacturing overhead for the month was underapplied by $12,000.
The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

-The cost of goods sold for November after allocation of any underapplied or overapplied overhead for the month is closest to:

A)$253,350
B)$275,310
C)$255,390
D)$277,350

Question 34

Sanker Inc.has provided the following data for the month of August.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$ 2,790 & \$ 7,680 & \$ 18,240 & \$ 28,710 \\\text {Direct labor...................}&9,700 &19,200& 45,600 &74,500 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{5,440} & \underline{8,000}& \underline{18,560} & \underline{32,000} \\\text {Total.............................}&\underline{ \$17,930} & \underline{ \$ 34,880} & \underline{ \$ 82,400} & \underline{\$ 135,210}\end{array}$ Manufacturing overhead for the month was overapplied by $5,000.
The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

-The work in process inventory at the end of August after allocation of any underapplied or overapplied overhead for the month is closest to:

A)$18,593
B)$18,780
C)$17,080
D)$17,267

Question 35

Ades Inc.has provided the following data for the month of July.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. Manufacturing overhead for the month was underapplied by $5,000.
The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.
Required:
Provide the journal entry that would record the allocation of underapplied or overapplied among work in process,finished goods,and cost of goods sold.

Question 36

Jupiter Inc.has provided the following data for the month of August.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. $\begin{array}{lrrrr}&\text {Work In}&\text { Finished }&\text {Cost of }\\&\text {Process}&\text { Goods}&\text { Goods Sold}&\text { Total}\\\text {Direct materials.............}&\$1,730 & \$ 10,00 & \$ 26,200 & \$ 37,930 \\\text {Direct labor...................}&2,250 & 16,000&41,920 &60,170 \\\text {Manufacturing overhead}&\\\text { applied..........................}&\underline{1,860} & \underline{8,060}& \underline{21,080} & \underline{31,000} \\\text {Total.............................}&\underline{ \$5,840} & \underline{ \$ 34,060} & \underline{ \$ 89,200} & \underline{\$ 129,100}\end{array}$ Manufacturing overhead for the month was underapplied by $2,000.
The company allocates any underapplied or overapplied overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

-The finished goods inventory at the end of August after allocation of any underapplied or overapplied overhead for the month is closest to:

A)$33,540
B)$33,532
C)$34,580
D)$34,588

Question 37

Molano Corporation has provided the following data concerning manufacturing overhead for June: $\begin{array}{llcc} \text { Actual manufacturing overhead incurred } &\$69,000 \\\text { Manufacturing overhead applied to Work in Process } &\$76,000\end{array}$

The company's Cost of Goods Sold was $255,000 prior to closing out its Manufacturing Overhead account.The company closes out its Manufacturing Overhead account to Cost of Goods Sold.Which of the following statements is true?

A)Manufacturing overhead was underapplied by $7,000;Cost of Goods Sold after closing out the Manufacturing Overhead account is $248,000
B)Manufacturing overhead was overapplied by $7,000;Cost of Goods Sold after closing out the Manufacturing Overhead account is $248,000
C)Manufacturing overhead was underapplied by $7,000;Cost of Goods Sold after closing out the Manufacturing Overhead account is $262,000
D)Manufacturing overhead was overapplied by $7,000;Cost of Goods Sold after closing out the Manufacturing Overhead account is $262,000

Question 38

Explain the potential problems of using absorption costing and suggest ways to minimize these problems.