Question

The following information relates to Wells Fargo for July 2008:

Actual direct labour hours $80,000

actual direct labour per hour $8

factory overhead rate per direct labour hour $12

factory overhead incurred $160,000

Assuming underapplied or overapplied overhead is transferred to cost of goods sold at the end of the period, which of the following would be the entry to the cost of goods sold account?

I REALLY DID NOT GET THIS DETAIL

PLS IN DETAIL .

Answer 1

	Actual direct labor hour cost	$80,000
	Actual direct labor per hour	$8
	Actual direct labor hours	10000
	Factory overhead rate per direct labor hour	$12
	Factory overhead applied	10000*12
	Factory overhead applied	$        120,000
	Factory overhead incurred	$        160,000
	Factory overhead underapplied	$          40,000
	Since actual cost is more than applied cost so we have to increase cost of goods sold
	Particulars	Debit	Credit
	Cost of goods Sold	$40,000
	Factory overhead		$40,000
	(Factory overhead cost underapplied transfer)