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A company transport assembles pieces of equipment. its normal costing system has two direct cost categories (direct materials and direct labor). Company uses machine hours

A company transport assembles pieces of equipment. its normal costing system has two direct cost categories (direct materials and direct labor). Company uses machine hours its allocation base. For 2018 it budgeted $5000 for all its overhead cost, expecting to use 2000 machine hours

Transactions/ cost during 2018

Materials and supplies purchases on credit 4700

DM used 4400

Direct manufacturing labor 2500

Indirect mftg labor incurred by production dep. 1200

Depreciation on plant and equip 2200

Utility cost 900

Manufacturiung overhead allocated (based on 1900 machine hours used) ?

Cost of goods manufactured 10000

Sales (all on credit) 35000

Cost of goods sold 8000

Questions:

  1. Use t accounts for DM inventory ( D150) WIP inventory ( D200) FG inventory ( D300) COGS and MFTG overhead control
  2. clearly specify whether this company manufacturing overhead is under or over applied and by how much
  3. Record journal entries to dispose of any under or over allocated manufacturing overhead
  4. Is this a write off approach for disposing of the under or over allocated overhead? why or why not

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Step: 1

To address the questions lets break them down into steps Step 1 Set Up TAccounts Lets start by setting up the necessary Taccounts for Direct Materials ... blur-text-image

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