Question

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 balance in the Work in Process Inventory account was $10,000. This inventory consisted of parts for 2,000 toys. The beginning balances in the Raw Materials Inventory, Production Supplies, and Cash accounts were $97,500, $1,000, and $200,000, respectively.

2. Direct materials costing $90,000 were issued to the parts department. The materials were sufficient to make 6,000 additional toys.
3. Direct labor cost was $80,000, and indirect labor costs were $6,000. All labor costs were paid in cash.
4. The predetermined overhead rate was $0.30 per direct labor dollar.
5. Actual overhead costs other than production supplies and indirect labor for the year were $18,250, which was paid in cash.
6. The parts department completed work for 6,400 toys. The remaining toy parts were 25 percent complete. The completed parts were transferred to the assembly department.
7. All of the production supplies had been used by the end of 2018.
8. Over- or underapplied overhead was closed to the Cost of Goods Sold account.

Determine the number of equivalent units of production.

Equivalent units 6800

((beg unit prod) 2000 + (mat sup for prod) 6000) – (comp toys) 6400 + ((% comp) .25 * (rem toys) 1600)

Determine the product cost per equivalent unit.

Cost per equivalent unit 30

((beg inv) 10000 + (dir mat) 90000 + (dir lab) 80000 + ((oh per labor) .30 * (dir lab) 80000)) / (equ units) 6800

Calculate the total cost allocated between the ending work in process inventory and parts transferred to the assembly department.

To the assembly department          192000      (comp toys) 6400 * (cost per equ unit) 30

To ending work-in-process inventory 12000        ((% comp) .25 * (rem toys) 1600) * 30

Total allocated costs                    204000

Record the transactions in a partial set of T-accounts.

Cash
Begin Bal	200000
		86000	3
		18250	5
End Bal	97750
Raw Mat
Begin Bal	97500
		90000	2
End Bal	7500
Work in Process Parts
Begining Bal	10000
2	90000	192600	6
3	80000
4	24000
End Bal	12000
Work in Process Assembly
Begining Bal	0
6	192000
End Bal	192000
Production Supplies
Begining Bal	1000
		1000	7
End Bal	0
Cost of Goods Sold
Begining Bal	0
8	???????????
End Bal	???????????	???????????
Manufacturing Overhead
Begining Bal	0
3	6000	24000	4
5	18250	???????????	8
7	1000
End Bal	???????????	???????????

Answer 1

All the entries are correct except entry 6 which shall be debited to cost of goods sold - Parts Dept.instead of Work-in-Process -- Assembly Department.

The manufacturing overhead t-account is also correct.

The debit side of the account totals to $25,250 (actual overhead incured)

The credit side of the account totals to $24,000 (overhead applied )

The difference between these two $1,250 is the underapplied ovehread which will come in the entry 8.

The final manufacturing overhead account ill look as follows.

Manufacturing Overhead
Ref	Debit	Credit	Ref
Beg.Bal.	0
3	6000	24000	4
5	18250	1250	8
7	1000
	25250	25250
End.Bal.	0

Manufacturing overhead account will be closed and no balance need to be carried forward.

The cost of goods sold account will look like below.

Cost of Goods Sold Ref Debit Credit Ref Beg.Bal. 0 6 192000 193250 9 8 1250
The entry 9 will be for transferrring the cost to Work-in-Process -- Asembly.