Question

In: Finance

The adjustment for overhead that is over- or under-allocated can occur in Work in Process in Cost of Goods Sold

The adjustment for overhead that is over- or under-allocated can occur

in Work in Process

in Cost of Goods Sold

in Finished Goods, Cost of Goods Sold, or Work in Process

in Cost of Goods Sold and Work In Process, but not in Finished Goods

in Finished Goods Inventory

Solutions

Expert Solution

The adjustment for overhead that is over or under allocated can occur in Option C - In finished goods, Cost of goods sold or Work in process account. The overheads over applied or under applied can be adjusted and closed at year end to any of the Finished goods, cost of goods sold or the work in process account. Hence, all 3 accounts are valid and Option C is the correct answer.

 

Option A, Option B and Option E are accounts where over or under applied overheads can be adjusted but since there is another option which includes all these 3, that option is correct.

 

Option D is incorrect as over or under applied overheads can be closed to Finished goods inventory account also.

Option D is incorrect as over or under applied overheads can be closed to Finished goods inventory account also.

Nabeel answered 1 year ago
Next > < Previous

Related Solutions

What is over-allocated overhead? and What is under-allocated overhead?
What is over-allocated overhead? and What is under-allocated overhead?
I am stuck on calculating the Over/Under-applied Overhead for the T-Accounts for Cost of Goods Sold...
I am stuck on calculating the Over/Under-applied Overhead for the T-Accounts for Cost of Goods Sold (??????????? - 8and Manufacturing Overhead (??????????? - 8). All others answers I have entered appear to be correct for all other questions and table entries. Please explain work so I understand what I am doing wrong. Lisburn Plastic Products Company makes a plastic toy using two departments: parts and assembly. The following data pertain to the parts department’s transactions in 2018: 1. The beginning...
Record the net variance closed to cost of goods sold. Record the net variance allocated to ending inventories and Cost of goods sold.
  Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 50,000 machine hours per year, which represents 25,000 units of output. Annual budgeted fixed factory overhead costs are $250,000 and the budgeted variable factory overhead cost rate is $4 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year...
Why can the computation of cost of goods sold be problematic in process costing? Are the...
Why can the computation of cost of goods sold be problematic in process costing? Are the product costs accounted for the same way in process costing as they are in job order costing?
Marco Polo Map Company’s cost of goods sold for March was $345,000. March 31 work-in-process inventory...
Marco Polo Map Company’s cost of goods sold for March was $345,000. March 31 work-in-process inventory was 90 percent of March 1 work-in-process inventory. Manufacturing overhead applied was 50 percent of direct-labor cost. Other information pertaining to the company’s inventories and production for the month of March is as follows: Beginning inventories, March 1: Raw material $ 18,000 Work in process 40,000 Finished goods 102,000 Purchases of raw material during March 112,000 Ending inventories, March 31: Raw material 26,000 Work...
Marco Polo Map Company’s cost of goods sold for March was $345,000. March 31 work-in-process inventory...
Marco Polo Map Company’s cost of goods sold for March was $345,000. March 31 work-in-process inventory was 90 percent of March 1 work-in-process inventory. Manufacturing overhead applied was 50 percent of direct-labor cost. Other information pertaining to the company’s inventories and production for the month of March is as follows: Beginning inventories, March 1: Raw material $ 18,000 Work in process 40,000 Finished goods 102,000 Purchases of raw material during March 112,000 Ending inventories, March 31: Raw material 26,000 Work...
Marco Polo Map Company’s cost of goods sold for March was $345,000. March 31 work-in-process inventory...
Marco Polo Map Company’s cost of goods sold for March was $345,000. March 31 work-in-process inventory was 90 percent of March 1 work-in-process inventory. Manufacturing overhead applied was 50 percent of direct-labor cost. Other information pertaining to the company’s inventories and production for the month of March is as follows: Beginning inventories, March 1: Raw material $ 16,000 Work in process 40,000 Finished goods 102,000 Purchases of raw material during March 114,000 Ending inventories, March 31: Raw material 26,000 Work...
What is under applied overhead? Over applied overhead?
UNDER vs. OVER APPLIED OVERHEADWhat is under applied overhead? Over applied overhead?   What is the disposition of these amounts at the end of the accounting period?
Cost of goods sold:
ABC Corporation reported the following data for the month of January: Inventories: Beginning Ending Raw materials 46,000 34,000 Work in process 31,000 29,000 Finished goods 27,000 55,000 Additional information: Raw materials purchases 79,000 Direct labor cost 93,000 Manufacturing overhead cost incurred 54,000 Indirect materials included in manufacturing overhead cost incurred 8,000 Manufacturing overhead cost applied to Work in Process 57,000 Calculate cost of goods sold during the month of January?
1) How do you calculate and incorporate fixed manufacturing overhead cost into cost of goods sold...
1) How do you calculate and incorporate fixed manufacturing overhead cost into cost of goods sold under absorption costing? Do you have to factor in goods produced as well as goods sold for this aspect of cost of goods sold? 2) When comparing variable costing net income and absorption costing net income, how do you know whether you are adding or deducting fixed manufacturing overhead deferred or released from inventory under absorption costing?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT