Refer to the data in Exercise E3-45B. Benson Foundry’s accountant found an error in the expense records from the year reported. Depreciation on manufacturing plant and equipment was actually \($415,000\), not the \($470,000\) it had originally reported. The unadjusted Cost of Goods Sold balance at year-end was \($560,000\).

Requirements:

1. Prepare the journal entry (entries) to record manufacturing overhead costs incurred.
2. Prepare the journal entry to record the manufacturing overhead allocated to jobs in production.
3. Use a T-account to determine whether manufacturing overhead is underallocated or overallocated, and by how much.
4. Record the entry to close out the underallocated or overallocated manufacturing overhead.
5. What is the adjusted ending balance of Cost of Goods Sold?

Data From E3-45B:-

Benson Foundry in Charleston, South Carolina, uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs based on the machine hours required. At the beginning of the year, the company expected to incur the following:

Requirements:

1. Compute Benson Foundry’s predetermined manufacturing overhead rate.
2. How much manufacturing overhead was allocated to jobs during the year?
3. How much manufacturing overhead was incurred during the year? Is manufacturing overhead underallocated or overallocated at the end of the year? By how much?
4. Were the jobs overcosted or undercosted? By how much?

Transcribed Image Text:

Manufacturing overhead costs...... Direct labor cost............ Machine hours........... At the end of the year, the company had actually incurred the following: Direct labor cost...... Depreciation on manufacturing plant and equipment.. Property taxes on plant.......... Sales salaries ........ Delivery drivers' wages Plant janitors' wages. Machine hours...... $ 610,000 $1,500,000 76,250 $1,220,000 $ 470,000 $ 19,000 $ 25,500 $ 14,500 $ 8,000 55,500 hours