Question
At Allen Company, manufacturing overhead is applied based on direct labor hours.Overhead was estimated to be $700,000 and direct labor hours were estimated to be
At Allen Company, manufacturing overhead is applied based on direct labor hours.Overhead was estimated to be $700,000 and direct labor hours were estimated to be 400,000.
Actual direct labor hours and actual direct labor costs for the year amounted to 450,000 hours and $800,000.
In addition, Allen Company incurred the following actual costs during the year:
Administrative expenses, $100,000
Depreciation expense on fixed assets, $600,000 (75% of the depreciation expense was related to manufacturing activities)
Indirect material costs, $50,000
Indirect labor costs, $100,000
Utility expense on the manufacturing facility, $125,000
Insurance expense on the manufacturing facility, $40,000
Marketing expenses, $75,000
Sales & promotion expenses, $25,000
Allen Company had the following inventory balances at the beginning and end of the year:
January 1
December 31
Finished goods
$450,000
$500,000
Work in process
600,000
700,000
Raw (direct) materials
350,000
375,000
During the year, the company purchased $250,000 of raw materials and generated sales of $2,000,000.
1.What amount of raw materials were used during the period?
2.What is the amount of prime costs?
3.What is the predetermined manufacturing overhead rate?
4.What amount is applied to manufacturing overhead?
5.What is the amount of Manufacturing Costs added for the period?
6.What is the Cost of Goods Manufactured?
7.At the end of year, was manufacturing overhead over- or under-applied?
8.Refer to the previous question. By what amount was manufacturing overhead over- or under-applied?
9.What is Cost of Goods Sold,afteradjusting for any under-or over-applied overhead?
10.What is Gross Profit?
11.What are total Selling, General & Administrative Expenses?
12.What is Net Income or Loss?
13.The journal entry to transfer costs to work in process includes adebitto which account?
a.Cost of goods sold
b.Finished goods
c.Manufacturing overhead
d.Work in process
e.None of the above
14.Refer to the previous question. The amount of the entry is:
15.The journal entry to transfer costs from work in process to finished goods includes adebitto which account?
a.Cost of goods sold
b.Finished goods
c.Manufacturing overhead
d.Work in process
e.None of the above
16.The journal entry to transfer costs from work in process to finished goods includes acreditto which account?
a.Cost of goods sold
b.Finished goods
c.Manufacturing overhead
d.Work in process
e.None of the above
17.Refer to the previoustwoquestions. The amount of the entry is:
18.The journal entry to transfer costs from finished goods to cost of goods sold includes adebitto which account?
a.Cost of goods sold
b.Finished goods
c.Manufacturing overhead
d.Work in process
e.None of the above
19.The journal entry to transfer costs from finished goods to cost of goods sold includes acreditto which account?
a.Cost of goods sold
b.Finished goods
c.Manufacturing overhead
d.Work in process
e.None of the above
20.Refer to the previoustwoquestions. The amount of the entry is:
21.The journal entry at the end of the period to adjust for over- or under-applied overhead will include a:
a.Debit to Selling, General and Administrative expenses
b.Credit to Finished Goods
c.Debit to Cost of goods sold
d.Credit to Cost of goods sold
e.None of the above
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