At the end of year 2010, Luke Maximillian Company's accounts exhibited a credit balanceof $66,000 in Manufacturing Overhead Control. Additionally, the firm have the givenaccount balances:Work in Process Inventory$384,000Finished Goods Inventory96,000Cost of Goods Sold720,000a. If the balance is considered immaterial, prepare the necessary journal entry to closethe overhead account.b. If the balance is considered material, prepare the necessary journal entry to close theoverhead account.c. Which method is more appropriate for the company? and why?

Solution:- a)Preparation of necessary journal entry to close the overhead account if the balance is…

a. If the balance is considered immaterial, prepare the necessary journal entry to closS the overhead account. b. If the balance is considered material, prepare the necessary journal entry to close th overhead account. c. Which method is more appropriate for the company? and why?

a. If the balance is considered immaterial, prepare the necessary journal entry to closS the overhead account. b. If the balance is considered material, prepare the necessary journal entry to close th overhead account. c. Which method is more appropriate for the company? and why?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Overapplied manufacturing overhead occurs when: a. applied overhead exceeds actual overhead. b.…

A: Introduction: Underapplied overhead: Overheads are expenses. Underapplied means the applied overhead…

Q: Managerial accounting a. is primarily for external users. b. has no mandatory rules. c, provides…

A: Managerial accounting is focused on providing information to managers. This helps the managers in…

Q: Segment data a. can be used for vertical, but not horizontal analysis b. is gathered from invoices…

A: Accounting: Accounting is a system, or a process of collecting and organizing economic transactions,…

Q: The following transactions occured in April at Steve's Cabinets, a custom cabinet firm. 1. Purchased…

A: A journal entry is a form of accounting entry that is used to report a business transaction in a…

Q: A responsibility accounting system utilizes and assigns costs on the basis of their a.…

A: With the use of a responsibility accounting system, performance and accountability may be evaluated…

Q: There must be a correlation between the activity and changes in the amount of overhead. True /…

A: Correlation:-It refers to the statistical relationship between two variables or activities.…

Q: It would be logical to maintain a separate Work in Process ledger account for each department. (T)…

A: Work-in-process ledger account consists of the goods that are partially completed and will be…

Q: J &G Manufacturing makes a single product by way of three separate processes. Details of production…

A: Process costing method used where raw material transferred in the different process then transferred…

Q: If actual overhead is greater than applied overhead, which of the following will be true? Upon…

A: If actual overhead is greater than applied overhead then the difference is called overapplied…

Q: Explain the costbenefits principles and how this affects the reliability and relevance of the…

A: Relevance refers to the concept or an idea that whatever information that is provided by the…

Q: Partially completed T-accounts and additional information for Pine Ridge Corporation for the month…

A: Inventories are those assets which are held by a company in order to earn profits through selling…

Q: The Maintenance Department of a company is considered to be a: A) Revenue Center B) Cost Center C)…

A: generally, the maintenance department is responsible and accountable for maintenance. a cost center…

Q: Managerial Accounting - TRUE OR FALSE All non-manufacturing costs are recorded as an expense in the…

A: Nonmanufacturing overhead costs are expenses that are unrelated to the manufacture of a good. Since…

Q: How is predetermined overhead rate established? How is it used to apply overhead?

Q: Which of the following events would be LEAST likely to be modeled in an REA diagram?a. customer…

A: Definition: REA model: The graphical representation which shows the re-engineered accounting system…

Q: What is the difference between a financial accounting information system and a cost management…

A: Financial accounting and Cost accounting are two different systems in accounting, which are used for…

Q: labor time tickets material requisitions

A: Work in process inventory is the amount of inventory that has started into production but has not…

Q: What is the adjusted balance of cost of goods sold after disposing the under-or-overapplied…

A: The balance of the manufacturing overhead control account is credit which means it is overapplied.

Q: What will you use to allocate the cost of the purchasing department? a.Number of purchase orders…

A: Answer) The correct answer in the given question is: Number of purchase orders generated…

Q: Which of the following statements about materials is false? A. Acquisitions of materials are…

A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…

Q: Discuss the difficulties associated with manual cost accounting and how the organization may improve…

A: Various difficulties associated with manual cost accounting system are as under : a.) Manual entry…

Q: If wages paid for installation of new machinery is debited to wages Account, it is:(a) An error of…

A: An error of principle is an accounting mistake in which an entry is recorded in the incorrect…

Q: Prepare the adjusting entry for manufacturing overhead, assuming the balance is allocated entirely…

A: Solution:- Calculation of Overapplied of Manufacturing overhead as follows under:- Overapplied of…

Q: What is the adjusted balance of finished goods inventory after disposing the under-or over-applied…

A: Cost of goods sold: Cost of goods sold means cost of producing the goods which are being sold by…

Q: Classify the following activities as part of the identifying (I), recording (R), or communicating…

A: Accounting: Accounting is a system, or a process of collecting and organizing economic…

Q: All manufacturing overhead costs that occur must be recorded as a(an) O Liability O Equity O Expense…

A: Overheads are considered as fixed and common expenses that should be allocated to the products on…

Q: Forest Components makes aircraft parts. The following transactions occurred in July. 1. Purchased…

A: Journal entries are the transactions which are recorded in the books to maintain a proper record of…

Q: Give the journal entry for raw materials product on account. Explain how this transaction affects…

A: The raw material inventory is a general ledger account. The details of raw material purchased and…

Q: determine whether overhead is overapplied or underapplied. It is also formatted as a table, but I…

A: Over-applied Overhead: A corporation is said to have over-applied overhead when the actual…

Q: How different in management accounting from cost accounting? Provide a brief commentary in two…

A: Definition: Accounting: Accounting is the process of recording, summarizing, and reporting all the…

Q: 1. Purchased $20,500 of materials on account. 2. Issued $1,250 of supplles from the materials…

A: The question is based on the concept of Cost Accounting.

Q: How do accounting books handle overhead overabsorption and underabsorption?

A: Overheads are the basic cost component of any product or service. It basically comprises of the…

Q: What are the two primary elements that influence the amount of overhead that is absorbed?

A: Whenever overheads are absorbed in a rate determined by objective data, the absorbed overhead should…

Q: Which of the following sentence not related to ‘purchasing by requirement’? a.Purchasing goods,…

A: Which of the following sentence not related to ‘purchasing by requirement’?a.Purchasing goods, which…

Q: What documents are needed for cost accounting clerks to update the work-in-process accounts with…

A: Cost Accounting System: Cost accounting system can be defined as a framework designed by the…

Q: Operating expenses are known as overhead expenses. True or False

A: Operating expenses occurs when normal business operations takes place.Expenses like direct…

Q: Manufacturing overhead is reported on the interim Balance Sheet both as current asset & current…

Question

At the end of year 2010, Luke Maximillian Company's accounts exhibited a credit balance
of $66,000 in Manufacturing Overhead Control. Additionally, the firm have the given
account balances:
Work in Process Inventory
$384,000
Finished Goods Inventory
96,000
Cost of Goods Sold
720,000
a. If the balance is considered immaterial, prepare the necessary journal entry to close
the overhead account.
b. If the balance is considered material, prepare the necessary journal entry to close the
overhead account.
c. Which method is more appropriate for the company? and why?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

One of the primary uses of a cost of production report is to assist management in controlling production costs. True or False?
Saved Green Cabinets is a custom cabinet builder. They recently completed a set of kitchen cabinets (Job Number 1478), as summarized below. Job Number:1478 Datn Started: 4/07/20xB Date Completedi 4/22/20x8 Description:Cherry kitchen cabinets Applied Manufacturing Overhead Rate Direct Materials Direct Labor Amount Hours Amount Reg. No 385 Amount Ticket Hours $ 370 295 $345 634 216 128 15 391 130 27 395 135 133 401 275 Total $1,075 Total 50 $1,196 Cost Summary Direct Material Cost Direct Labor Cost $1,075 1,196 Applied Manufacturing Overhead Total Cost Green Cabinets applies overhead to jobs at a rate of $14 per direct labor hour. (a) How much overhead would be applied to Job Number 1478? Applied Manufactunng Overhead (b) What is the total cost of Job Number 1478?
What features of the cost accounting system would be expected to prevent the omission ofrecording materials used in production?
When is manufacturing overhead underapplied? When is it overapplied? ( in Managerial Accounting )
The company would make an adjusting entry for the underapplied overhead by debiting cost of goods sold and- crediting hp
1. How do the relationships between the balance sheet, income statement, job cost ledger, and equipment ledger help determine the changes made by each transaction?
An auditor reviews job cost sheets to test which transaction assertion?a. Occurrence.b. Completeness.c. Accuracy.d. Classification.
Describe how the over or under application of overhead should be corrected in the accounting records.
When overhead is overapplied, is the balance of Cost of Goods Sold, before adjustment, too low ortoo high? Why?
What does the credit side of manufacturing overhead control account has?
Explain the journal entry for the allocation of overhead. What accounts are affected? Are they increased or decreased?
What is factory equipment an example of? A. A liability B. Revenue C. An expense D. An asset