Question

# Manufacturing overhead applied \$ 150,000 Actual amount of manufacturing overhead costs 120,000 Amount of overhead applied...

 Manufacturing overhead applied \$ 150,000 Actual amount of manufacturing overhead costs 120,000 Amount of overhead applied during the year that is in: Work in Process \$ 37,500 25 % Finished Goods 52,500 35 % Cost of Goods Sold 60,000 40 % Total overhead applied \$ 150,000 100 %

Knowledge Check 01

If the Manufacturing Overhead account is closed to Cost of Goods Sold, the related entry will ________.

• decrease the cost of goods sold by \$30,000

• increase the cost of goods sold by \$30,000

• decrease the cost of goods sold by \$150,000

• increase the cost of goods sold by \$150,000

Knowledge Check 02

If the Manufacturing Overhead account is closed proportionally to Work in Process, Finished Goods, and Cost of Goods Sold, the related entry will include a ________.

• debit to Cost of Goods Sold for \$12,000

• credit to Cost of Goods Sold for \$12,000

• credit to Cost of Goods Sold for \$30,000

• debit to Work in Process for \$7,500

Over applied overhead = 150000-120000 = \$30000

1) Journal entry

 Date account and explanation debit credit Manufacturing overhead 30000 Cost of goods sold 30000

So answer is a) decrease the cost of goods sold by \$30,000

2) Journal entry

 Date account and explanation debit credit Manufacturing overhead 30000 Work in process (30000*25%) 7500 Finished goods (30000*35%) 10500 Cost of goods sold 12000

So answer is b) Credit to cost of goods sold for \$12000

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