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IV. Smith Co, has the following manufacturing costs: budgeted indirect-cost rate of $10 per direct labor-hour Direct materials $400,000 Direct labor (14,000 hours @ $11/hour)
IV. Smith Co, has the following manufacturing costs: budgeted indirect-cost rate of $10 per direct labor-hour Direct materials $400,000 Direct labor (14,000 hours @ $11/hour) $ 154,000 Indirect labor $ 40,000 Plant facility rent $ 150,000 Depreciation on plant machinery and equipment $ 32,000 Sales commissions $ 60,000 Administrative expenses $ 50,000 Required: a. What was the actual amount of manufacturing overhead costs? (5 points) b. What was the manufacturing overhead cost allocated ? (5 points) was manufacturing overhead underallocated or overallocated? (5 points) c. V. After finishing the year we decided to adjust the CGS. We used a budgeted indirect- cost rate for the manufacturing operations, the amount that was allocated ($645,000) to cost of goods sold was different from the actual amount incurred ($625,000). Ending balances in the relevant accounts were: Work-in-Process Finished Goods Cost of Goods Sold $ 80,000 160,000 1,360,000 Required: a. Prepare a journal entry to write off the difference between allocated and actual overhead directly to Cost of Goods Sold. (6 points) b. Prepare a journal entry that prorates the write-off of the difference between allocated and actual overhead using ending account balances.(show calculations) (14 points)
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