Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

15. Micro Enterprises planned to produce 120,000 lerts per year. Annual overhead, of which 32.5% is variable, is estimated at $360,000. Each lert takes 1.2

15. Micro Enterprises planned to produce 120,000 lerts per year. Annual overhead, of which 32.5% is variable, is estimated at $360,000. Each lert takes 1.2 machine hours and 3 labor hours to produce. The firm allocates overhead by direct labor hours.

You review the accounting records at the end of the year. You learn that Micro made 125,000 lerts in the year. Actual overhead expenditures totaled $370,000. Which is true with respect to Under/Over-applied overhead?

A. Under-applied overhead is $5,000 and should be credited to Cost of Goods Sold

B. Over-applied overhead is $5,000 and must be prorated across Raw Materials, Work in Process, and Finished Goods inventories and Cost of Goods Sold

C. Over-applied overhead is $5,000 and can be charged to Cost of Goods Sold or prorated across Raw Materials, Work in Process, Finished Goods and Cost of Goods Sold

  • D. None of the choices are correct

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Modern Advanced Accounting In Canada

Authors: Hilton Murray, Herauf Darrell

9th Edition

1259654699, 978-1259654695

More Books

Students also viewed these Accounting questions

Question

Solve: x 3 + 9x 2 + 16x - 6 = 0.

Answered: 1 week ago

Question

3. How can we use information and communication to generate trust?

Answered: 1 week ago