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

Homework Answers

Answer #1

Applied overhead = $150000

Actual overhead = $120000

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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