Assume the following are year-end balances: Work in Process $ 20,000 Finished Goods 25,000 Cost of...

Assume the following are year-end balances:

Work in Process	$ 20,000
Finished Goods	25,000
Cost of Goods Sold	35,000

If manufacturing overhead is overapplied by $10,000, and it is considered a material amount, which of the following would be included in the entry closing the Manufacturing Overhead account?

Credit Finished Goods $3,125

Debit Cost of Goods Sold $3,500

Credit Manufacturing Overhead $10,000

Debit Work in Process $3,333

Expert Solution

Correct Answer:

Credit Finished Goods $ 3,125

Working:

Since Overhead is Over applied, we will need to Debit manufacturing overhead, and credit the following accounts by the amount calculated below.

	A	B = A/Total *100	C = 10,000 * B
	Ending balance	% of total	share of over applied OH
WIP	$ 20,000	25%	$ 2,500
Finished Goods	$ 25,000	31%	$ 3,125
Cost of goods sold	$ 35,000	44%	$ 4,375

Total	$ 80,000	100%	$ 10,000

End of Answer.

Thanks

ekkarill92 answered 2 years ago

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