Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the

Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $612,000 of total manufacturing overhead for an estimated activity level of 68,000 machine-hours. During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the companys warehouse. The companys cost records revealed the following actual cost and operating data for the year: Machine-hours 50,000 Manufacturing overhead cost $ 570,000 Inventories at year-end: Raw materials $ 18,000 Work in process (includes overhead applied of $22,500) $ 93,500 Finished goods (includes overhead applied of $76,500) $ 317,900 Cost of goods sold (includes overhead applied of $351,000) $ 1,458,600 Required: 1. Compute the underapplied or overapplied overhead. 2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry. 3. Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry. 4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Survey of Accounting

Authors: Carl S Warren

5th Edition

9780538489737, 538749091, 538489731, 978-0538749091

More Books

Students also viewed these Accounting questions

Question

"Dhimashada nidaamka iyo sharaxda guud ee xiddigaha."

Answered: 1 week ago

Question

How can I succeed?

Answered: 1 week ago

Question

=+ d. What happens to Oceanias trade balance?

Answered: 1 week ago