Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,332,000 of total manufacturing overhead for an estimated activity level of 74,000 machine-hours.
During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year:
| Machine-hours | 62,000 | |
| Manufacturing overhead cost | $ | 1,300,000 |
| Inventories at year-end: | ||
| Raw materials | $ | 20,000 |
| Work in process (includes overhead applied of $100,440) | $ | 176,400 |
| Finished goods (includes overhead applied of $223,200) | $ | 392,000 |
| Cost of goods sold (includes overhead applied of $792,360) | $ | 1,391,600 |
Required:
1. Compute the underapplied or overapplied overhead.
2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry.
3. Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry.
4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold?
In: Accounting
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,068,000 of total manufacturing overhead for an estimated activity level of 89,000 machine-hours.
During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year:
| Machine-hours | 74,000 | |
| Manufacturing overhead cost | $ | 1,029,000 |
| Inventories at year-end: | ||
| Raw materials | $ | 10,000 |
| Work in process (includes overhead applied of $44,400) | $ | 91,000 |
| Finished goods (includes overhead applied of $150,960) | $ | 309,400 |
| Cost of goods sold (includes overhead applied of $692,640) | $ | 1,419,600 |
Required:
1. Compute the underapplied or overapplied overhead.
2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry.
3. Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry.
4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold?
In: Accounting
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,066,000 of total manufacturing overhead for an estimated activity level of 82,000 machine-hours.
During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year:
| Machine-hours | 68,000 | |
| Manufacturing overhead cost | $ | 1,029,000 |
| Inventories at year-end: | ||
| Raw materials | $ | 17,000 |
| Work in process (includes overhead applied of $88,400) | $ | 192,000 |
| Finished goods (includes overhead applied of $132,600) | $ | 288,000 |
| Cost of goods sold (includes overhead applied of $663,000) | $ | 1,440,000 |
Required:
1. Compute the underapplied or overapplied overhead.
2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry.
3. Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry.
4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold?
In: Accounting
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,207,000 of total manufacturing overhead for an estimated activity level of 71,000 machine-hours.
During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year:
| Machine-hours | 55,000 | |
| Manufacturing overhead cost | $ | 1,169,000 |
| Inventories at year-end: | ||
| Raw materials | $ | 11,000 |
| Work in process (includes overhead applied of $46,750) | $ | 100,000 |
| Finished goods (includes overhead applied of $187,000) | $ | 400,000 |
| Cost of goods sold (includes overhead applied of $701,250) | $ | 1,500,000 |
Required:
1. Compute the underapplied or overapplied overhead.
2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry.
3. Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry.
4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold?
In: Accounting
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $980,000 of total manufacturing overhead for an estimated activity level of 98,000 machine-hours.
During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year:
| Machine-hours | 78,000 | |
| Manufacturing overhead cost | $ | 941,000 |
| Inventories at year-end: | ||
| Raw materials | $ | 15,000 |
| Work in process (includes overhead applied of $39,000) | $ | 97,500 |
| Finished goods (includes overhead applied of $117,000) | $ | 292,500 |
| Cost of goods sold (includes overhead applied of $624,000) | $ | 1,560,000 |
Required:
1. Compute the underapplied or overapplied overhead.
2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry.
3. Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry.
4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold?
In: Accounting
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,368,000 of total manufacturing overhead for an estimated activity level of 72,000 machine-hours.
During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year:
| Machine-hours | 61,000 | |
| Manufacturing overhead cost | $ | 1,324,000 |
| Inventories at year-end: | ||
| Raw materials | $ | 16,000 |
| Work in process (includes overhead applied of $115,900) | $ | 188,000 |
| Finished goods (includes overhead applied of $208,620) | $ | 338,400 |
| Cost of goods sold (includes overhead applied of $834,480) | $ | 1,353,600 |
Required:
1. Compute the underapplied or overapplied overhead.
2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry.
3. Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry.
4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold?
In: Accounting
. Your firm is managing 4 investment products with the following characteristics:
Equity Standard
200 stocks
P/E= 1.05x that of the broad market
D/E= 0.95x that of the broad market
All Economic Sectors
Total assets under management= $ 2.5 billion
Value Dynamics
110 stocks
P/E= 2.0x that of the broad market
D/E= 85 percentile of the broad market
Overweight in technology, health care and housing sector
Total assets under management = $ 1.5 billion
Blue Growth
125 stocks
P/E= 0.75x that of the broad market
D/E= 35 percentile of the broad market
Overweight in consumer staples, utilities, and closed end funds
Total assets under management = $ 4.5 billion
Fixed Income Plus
250 bonds
50% invested in government bonds, half in maturities below 10 years and the rest with maturities above 10 year
25% invested in US Corporate Bonds. 75% of the US Corporates invested in Investment grade bonds and the rest in high yield bonds.
25% in international bonds, half of it in developed markets and the other half in emerging markets
Total assets under management = $ 5.0 billion
Global Growth
This product is a combination of the above four products.
Total assets under management = $ 7.5 billion
In: Finance
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $900,000 of total manufacturing overhead for an estimated activity level of 75,000 machine-hours.
During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year:
Machine Hours: 60,000
Manufacturing Overhead cost: $850,000
Inventories at year-end:
Raw Materials $30,000
Work in Process (includes overhead applied of $36,000) $100,000
Finished goods (includes overhead applied of $180000) $500,000
Cost of goods sold (includes overhead applied of $504,000) $1,400,000
Required:
1. Compute the underapplied or overapplied overhead.
2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry.
3. Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry.
4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold?
In: Accounting
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $651,000 of total manufacturing overhead for an estimated activity level of 93,000 machine-hours.
During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year:
Machine-hours 74,000 Manufacturing overhead cost $ 618,000 Inventories at year-end: Raw materials $ 11,000 Work in process (includes overhead applied of $41,440) $ 146,400 Finished goods (includes overhead applied of $98,420) $ 347,700 Cost of goods sold (includes overhead applied of $378,140) $ 1,335,900
Required: 1. Compute the underapplied or overapplied overhead.
2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry.
3. Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry.
4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold?
In: Accounting
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,068,000 of total manufacturing overhead for an estimated activity level of 89,000 machine-hours. During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year: Machine-hours 74,000 Manufacturing overhead cost $ 1,029,000 Inventories at year-end: Raw materials $ 10,000 Work in process (includes overhead applied of $44,400) $ 91,000 Finished goods (includes overhead applied of $150,960) $ 309,400 Cost of goods sold (includes overhead applied of $692,640) $ 1,419,600 Required: 1. Compute the underapplied or overapplied overhead. 2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry. 3. Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry. 4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold?
In: Accounting