Erkens Company uses a job costing system with normal costing and applies factory overhead on the basis of machine hours. At the beginning of the year, management estimated that the company would incur $2,145,000 of factory overhead costs and use 65,000 machine hours. Erkens Company recorded the following events during the month of April: Purchased 192,000 pounds of materials on account; the cost was $5.60 per pound. Issued 126,000 pounds of materials to production, of which 18,000 pounds were used as indirect materials. Incurred direct labor costs of $270,000 and $46,000 of indirect labor costs. Recorded depreciation on equipment for the month, $76,900. Recorded expired insurance costs for the manufacturing property, $4,100. Paid $9,100 cash for utilities and other miscellaneous items for the manufacturing plant. Completed Job H11 costing $8,100 and Job G28 costing $80,000 during the month and transferred them to the Finished goods inventory account. Shipped Job G28 to the customer during the month. The job was invoiced at 40% above cost. Used 8,900 machine hours during April. Compute the amount of overapplied or underapplied overhead and Prepare a journal entry to close overapplied or underapplied overhead into cost of goods sold on April 30.

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Description: Erkens Company uses a job costing system with normal costing and applies factory overhead on the basis of machine hours. At the beginning of the year, management estimated that the company would incur $2,145,000 of factory overhead costs and use 65,0

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Erkens Company uses a job costing system with normal costing and applies factory overhead on the basis of machine hours. At the beginning of the year, management estimated that the company would incur $2,145,000 of factory overhead costs and use 65,000 machine hours. Erkens Company recorded the following events during the month of April: Purchased 192,000 pounds of materials on account; the cost was $5.60 per pound. Issued 126,000 pounds of materials to production, of which 18,000 pounds were used as indirect materials. Incurred direct labor costs of $270,000 and $46,000 of indirect labor costs. Recorded depreciation on equipment for the month, $76,900. Recorded expired insurance costs for the manufacturing property, $4,100. Paid $9,100 cash for utilities and other miscellaneous items for the manufacturing plant. Completed Job H11 costing $8,100 and Job G28 costing $80,000 during the month and transferred them to the Finished goods inventory account. Shipped Job G28 to the customer during the month. The job was invoiced at 40% above cost. Used 8,900 machine hours during April. Compute the amount of overapplied or underapplied overhead and Prepare a journal entry to close overapplied or underapplied overhead into cost of goods sold on April 30.

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