Question

Clemmens Company applies overhead based on direct labor cost. Estimated overhead and direct labor costs for the year were $113,500 and $125,100, respectively. During the year, actual overhead was $107,500 and actual direct labor cost was $119,000. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include (Round predetermined overhead rate to nearest whole percentage.)

Multiple Choice

• A debit to Work in Process Inventory for $790.

• A credit to Factory Overhead for $790.

• A credit to Cost of Goods Sold for $790.

• A credit to Finished Goods Inventory for $790.

• A debit to Cost of Goods Sold for $790.

• Andrew Industries purchased $172,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $23,400, and the materials used to complete jobs during the month were $147,300 of direct materials and $13,700 of indirect materials. What is the ending Raw Materials Inventory balance for March?
  

  Multiple Choice

• $48,100.

• $12,400.

• $34,400.

• $24,700.

• $9,700.

• 
  

Answer 1

1	A credit to Cost of Goods Sold for $790.
	Manufacturing Overhead	$113,500
	Direct labor-hours	$125,100
	Predetermined overhead rate =	Estimated Overhead/ Direct labor cost
		$113,500/$125,100
		0.91
	Overhead applied =	Predetermined overhead rate × actual labor cost
		0.91 x $119,000
		$108,290
	Overapplied	$790
	($108,290 - $107,500)
2	$34,400
	The ending Raw Materials Inventory balance for March
	($23,400 + $172,000 - $147,300 - $13,700)