Comprehensive Problem $6($Algo$)$

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Utease Corporation has several production plants nationwide. A newly opened plant in Dubuque produces and sells one product. The plant is treated, for responsibility accounting purposes, as a profit center. The unit standard costs for a production unit, with overhead applied based on direct labor hours, are as follows.

Manufacturing costs $($per unit based on expected activity of $17,000$ units or $18,700$ direct labor hours$)$:

Direct materials $(1\mathrm{.}8$ pounds at $$10)$ $ $18\mathrm{.}00$

Direct labor $(1\mathrm{.}1$ hours at $$60)66\mathrm{.}00$

Variable overhead $(1\mathrm{.}1$ hours at $$10)11\mathrm{.}00$

Fixed overhead $(1\mathrm{.}1$ hours at $$20)22\mathrm{.}00$

Standard cost per unit $ $117\mathrm{.}00$

Budgeted selling and administrative costs:

Variable $ $4$ per unit

Fixed $ $1,500,000$

Expected sales activity: $13,000$ units at $$350$ per unit

Desired ending inventories: $12\%$ of sales

Assume this is the first year of operations for the Dubuque plant. During the year, the company had the following activity.

Units produced $16,000$

Units sold $14,500$

Unit selling price $ $345$

Direct labor hours worked $17,100$

Direct labor costs $ $1,043,100$

Direct materials purchased $32,800$ pounds

Direct materials costs $ $328,000$

Direct materials used $32,800$ pounds

Actual fixed overhead $ $1,000,000$

Actual variable overhead $ $87,000$

Actual selling and administrative costs $ $1,652,000$

In addition, all over$-$ or underapplied overhead and all product cost variances are adjusted to cost of goods sold.

Comprehensive Problem $6($Algo$)$ Part e

e$-1.$ Find the total over$-$ or underapplied $($both fixed and variable$)$ overhead.

e$-2.$ Would cost of goods sold be a larger or smaller expense item after the adjustment for over$-$ or underapplied overhead?