Applied vs$.$ Actual Manufacturing Overhead

Davis Manufacturing Corporation applies manufacturing overhead on the basis of $150\%$ of direct labor cost. An analysis of the related accounts and job order cost sheet indicates that during the year total manufacturing overhead incurred was $$157,500$ and that at year$-$end Work in Process Inventory, Finished Goods Inventory, and Cost of Goods Sold included $$20,000,$ $$10,000,$ and $$70,000,$ respectively, of direct labor incurred during the current year.

a$.$ Determine the under applied manufacturing overhead at year$-$end $($assume it is significant$).$

Applied Manufacturing Overhead

Work in process Answer

Finished goods Answer

Cost of goods sold Answer

Total: Answer

Under$-$applied manufacturing overhead $Answer

b$.$ Prepare a journal entry to record the disposition of the underapplied manufacturing overhead.

General Journal

Description Debit Credit

Answer

Work in process inventory

Answer

Answer

Answer

Finished goods inventory

Answer

Answer

Answer

Cost of goods sold

Answer

Answer

Answer

Manufacturing overhead

Answer

Answer