Question

17. The actual manufacturing overhead incurred at Jeffry Corporation during January was $73,000, while the manufacturing overhead applied to Work in Process was $78,000. The company's Cost of Goods Sold was $349,000 prior to closing out its Manufacturing Overhead account. The company closes out its Manufacturing Overhead account to Cost of Goods Sold. Which of the following statements is true? a. Manufacturing overhead was overapplied by $5,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $354,000 b. Manufacturing overhead was underapplied by $5,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $344,000 c. Manufacturing overhead was underapplied by $5,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $354,000 d. Manufacturing overhead was overapplied by $5,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $344,000

18. Dallas, Inc. an appliance manufacturer, is developing a new line of ovens that uses controlled-laser technology. The research and testing costs associated with the new ovens is said to arise from a: a. unit-level activity. b. batch-level activity c. product-level activity d. facility-level activity e. competitive-level activity

Answer 1

17) Applied overhead = $78000

Actual overhead = $73000

Over applied overhead = 78000-73000 = $5000

Date	account and explanation	debit	credit
	Manufacturing overhead	5000
	Cost of goods sold		5000
	(To close over applied overhead)

Cost of goods sold after manufacturing overhead closed out = 349000-5000 = $344000

so answer is d) Manufacturing overhead was overapplied by $5,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $344,000

18) Research and testing cost with new oven is competitive level Cost

So answer is e) Competitive level Activity