Entries for Factory Overhead. Blend Rite Inc. assembles and sells electric mixers. All parts are purchased and labor is paid on the basis of $22 per mixer assembled. The cost of the parts per mixer totals $20. As the company handles only this one product, the unit cost basis for applying factory overhead is used. Estimated factory overhead for the coming period, based on a production of 40,000 mixers, is as follows: Indirect materials .................................................................................................................................... $ 60,000 Indirect labor ........................................................................................................................................... 180,000 Light and power....................................................................................................................................... 45,000 Depreciation ............................................................................................................................................. 35,000 Miscellaneous ........................................................................................................................................... 16,000 During the period, 42,000 mixers were assembled and actual factory overhead was $355,000. These units were completed but not yet transferred to the finished goods storeroom. Required: (1) Prepare journal entries to record the above information, including the entry to close the balance in the applied overhead account to the actual overhead account. (2) Determine the amount of over- or underapplied factory overhead.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Entries for Factory
and labor is paid on the basis of $22 per mixer assembled. The cost of the parts per mixer totals $20. As the
company handles only this one product, the unit cost basis for applying factory overhead is used. Estimated
factory overhead for the coming period, based on a production of 40,000 mixers, is as follows:
Indirect materials .................................................................................................................................... $ 60,000
Indirect labor ........................................................................................................................................... 180,000
Light and power....................................................................................................................................... 45,000
Miscellaneous ........................................................................................................................................... 16,000
During the period, 42,000 mixers were assembled and actual factory overhead was $355,000. These units were
completed but not yet transferred to the finished goods storeroom.
Required:
(1) Prepare
applied overhead account to the actual overhead account.
(2) Determine the amount of over- or underapplied factory overhead.
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