Question

The following form represents an account taken from the gen- eral ledger of Scary Costumes Co.: Indirect materials Supervisor’s salary Power Building expenses Miscellaneous overhead Bal.

1,100 500 1,200 5,000 1,000 1,400 9,100 Work in Process (50% of $16,000 direct labor) 8,000

Indirect materials 500 Supervisor's Salary 1,200 Power 5,000 Building expenses 1,000 Miscellaneous overhead 1,400 BAL. 1,000 9,100

Work in Process (50% of $16,000 direct labor) 8,000

Answer the following questions:

a. What is the title of the account?

b. Is this a departmentalized factory?

c. What does the balance of $1,100 represent?

d. How was the 50% rate determined? (Explain without numbers.)

e. What disposition should be made of the balance, assuming that this is the end of the fiscal year?

Answer 1

ans a
Title of the account is
Manufacturing Overhead
or we can also say factory overhead
ans b
Yes it is a departmentalized factory
ans c
Balance of $1100 represents Underapplied
manufacturing overhead
As actual overhead is $9100 and applied is $8000
so underapplied is $1100 (9100-8000)
ans d
Estimated manufacturing overhead rate is determined on the basis of direct labor hours/direct labor cost/machine hours etc
In this case it as determined as % of direct labor cost.It is 50% of the direct labor cost incurred
ans e The underapplied overhead will be charged to cost
of good sold
entry is	Dr	Cr
Cost of good sold	$1,100
Manufacturing Overhead		$100
If any doubt please comment