Refer to the information in Exercise 13.

Data From  Exercise 13

During the month of August, Star Plastics applied overhead to jobs using an overhead rate of $4 per dollar of direct labor. Direct labor in August was $75,000. Actual overhead in August was $250,000. Assume that actual overhead was composed of the following items:

Required
a. Determine the balance in manufacturing overhead and prepare a journal entry to close the balance to cost of goods sold.
b. Why is it important to close the balance in manufacturing overhead?
c. What is the justification for assigning the balance in manufacturing overhead to Cost of Goods Sold rather than apportioning it to Work in Process, Finished Goods, and Cost of Goods Sold?

Transcribed Image Text:

Indirect materials $ 35,000 Indirect labor 75,000 Utilities 20,000 Depreciation 80,000 Repair expense 40,000 Total $250,000