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In: Accounting

Answer A-C using table 2. Journal Entry Cost Of Goods Sold 77,975 Dr. Factory Overhead    77,975...

Answer A-C using table

2. Journal Entry

Cost Of Goods Sold 77,975 Dr.

Factory Overhead    77,975 Cr.

Factory Overhead method comparisons

Using DL $s

Using DL hours

Using Machine Hours

Budgeted OH in Dollars – calculated in 5b

249,518

249,518

249,518

Estimated driver amount

137,235

10,000

DL hours

14,000

Machine hours

Predetermined overhead rate

0.55

24.95

17.82

Actual driver amounts

98,025

7,800 DL hours

13,800 hours

Applied factory overhead

63,525

194,610

245,916

over/(under) applied factory overhead amount

77,975

54,908

3,602

Over or Under-applied?

under

under

under

  1. write the journal entry (from 2 above) that would have been required to clear the Factory overhead account assuming the company applied overhead using
  1. Direct labor hours:

  1. Machine hours:

  1. Think about the relationship of budgeted overhead to the amount of overhead applied. Given that the “drivers” were estimated to be higher than they were, does it make sense that overhead was underapplied? Compare the actual overhead with the estimated/budgeted overhead. What do you think is happening? Explain using 30 to 50 words.

  1. Would using a different driver significantly affect the amount of Cost of Goods Sold recorded on the income statement for May? Why or why not? Explain using 10 to 30 words.

Solutions

Expert Solution

ekkarill92 answered 1 year ago
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