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Can you please provide a solution to the above problem? Question: Applying Overhead: Underapplied or Overapplied Overhead: Income Statement [LO 4-2, LO 4-4, LO 4-5]
Can you please provide a solution to the above problem?
Question: Applying Overhead: Underapplied or Overapplied Overhead: Income Statement [LO 4-2, LO 4-4, LO 4-5] Durham Company uses a job-order costing System. The following transactions took place last year a. Raw materials requisitioned for use in production, $40,000 (80% direct and 20% indirect). b. Factory utility costs incurred, $14,600. c. Depreciation recorded on plant and equipment, $28,000. Three-fourths of the depreciation relates to factory equipment, and the remainder relates to selling and administrative equipment. d. Costs for salaries and wages were incurred as follows: e. Insurance costs incurred, $3,000 (80% relates to factory operations, and 20% relates to selling and administrative activities). f. Miscellaneous selling and administrative expenses incurred, $18,000. g. Manufacturing overhead was applied to production. The company applies overhead on the basis of 150% of direct labor cost. h. Goods that cost $130,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. i. Goods that had cost $120,000 to manufacture according to their job cost sheets were sold for $200,000. Required: 1. Determine the underapplied or overapplied overhead for the year. 2. Prepare an income statement for the year. (Hint: No calculations are required to determine the cost of goods sold before any adjustment for underapplied or overapplied overhead.)Step by Step Solution
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