please solution with clear step by step so i can understand, especially for the purple highlited part!
Exercise 5.38 Indigo's Van Service customizes light trucks according to customers' orders. This month the company worked on five jobs, numbered 207 through 211. Materials requisitions for the month were as follows: Other Ticket 207 208 209 210 211 Indirect Total costs Carpet $ 35 80 215 30 55 Paint $ 355 200 395 155 Electronics $ 545 410 210 700 55 Total $ 935 690 820 885 110 750 $ 4,190 $ 750 An analysis of the payroll records revealed the following distribution for labour costs: Job 207 208 209 210 211 Other Total Direct labour $ 1,500 $ 1,100 $ 800 $ 1,700 $ 400 $ 5,500 Indirect labour $ 2,200 2,200 Total costs $ 7,700 Other overhead costs (consisting of rent, amortization, taxes, insurance, utilities, etc.) amounted to $3,600. At the beginning of the period, management anticipated that overhead costs would be $6,400 and total direct labour would amount to $5,000. Overhead is allocated on the basis of direct labour dollars. Jobs 207 through 210 were finished during the month; Job 211 is still in process. Jobs 207 through 209 were picked up and paid for by customers. Job 210 is still on the lot, waiting to be picked up. Exercise 5.38 Prepare the journal entries to reflect the incurrence of materials, labour, and overhead costs; the allocation of overhead; and the transfer of units to finished goods and cost of goods sold. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry Required" for the account titles and enter o for the amounts.) Account Titles and Explanation Credit Overhead Cost Control Debit 750 3,440 4,190 5,500 Work-in-Process Inventory Raw Materials Inventor (To record direct materials) Work-in-Process Inventory Overhead Cost Control Wages Payable (To record direct labour) Work-in-Process Inventory 2,200 7,700 7,040 - 7 Z 7,040 3,600 Overhead Cost Control (To record allocated overhead) Overhead Cost Control Miscellaneous Accounts (To record other overhead costs) Finished Goods Inventory 3,600 14,958 14,958 Work-in-Process Invent (To record cost of goods manufactured) Cost of Goods Sold 2 7 V 10,197 10,197 Finished Goods Invento (To record cost of goods sold) Solution Exercise 5.38 Overhead Cost Control ($5,500 $1.28) = $7,040 Finished Goods Inventory (54,355 + $3,198 + $2,644) = $10,197 Convrichte 2000-2001 bw Inhn Wilev Re Sons. Inc. or related comanies. All ri Your answer is correct. Close overapplied or underapplied overhead to cost of goods sold. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry Required for the account titles and enter o for the amounts.) Account Titles and Explanation Debit Credit Overhead Cost Control 490 Cost of Goods Sold 490 J Solution CLOSE Exercise 5.38 The problem instructed students to close over- or underapplied overhead to cost of goods sold. For Vern's Van Service, the amount of overapplied cost of goods sold was small, so it would probably be viewed as immaterial-and it would be reasonable to close it to cost of goods sold
