Example: To continue the example, assume XYZ Company incurred $180,000 of manufacturing expenses and that actual machine hours were 25,000. 1. Calculate the actual overhead rate based on machine hours. 2. Assume the variance is not material to XYZ Company. What journal entry would be made? 3. Assume the variance is material and that the applied overhead included in the ending balances in the work-in-process, finished goods, and cost of goods sold account is $50,000, $100,000, and $350,000, respectively. What amount of variance should be allocated to cost of goods sold?

Example: To continue the example, assume XYZ Company incurred $180,000 of manufacturing expenses and that actual machine hours were 25,000. 1. Calculate the actual overhead rate based on machine hours. 2. Assume the variance is not material to XYZ Company. What journal entry would be made? 3. Assume the variance is material and that the applied overhead included in the ending balances in the work-in-process, finished goods, and cost of goods sold account is $50,000, $100,000, and $350,000, respectively. What amount of variance should be allocated to cost of goods sold?

Name: Example: To continue the example, assume XYZ Company incurred$180,000
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Description: Example: To continue the example, assume XYZ Company incurred$180,000 of manufacturing expenses and that actual machine hours were25,000.1. Calculate the actual overhead rate based on machine hours.2. Assume the variance is not material to XYZ Compa

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following data on materials purchased and issued during the month of June were shown: the cost of materials issued to production (under FIFO method) should be: 2.Of the following costs, how much is the total product/manufacturing costs? Direct Labor> P 50,000. Factory Rent >P 10,000. Indirect Labor >P10,000 . Salaries of Factory Supervisor >P35,000. Factory supplies used >P 5,000. Indirect Materials >P15,000. Direct Materials >P45,000. Salary of sales >P35,000. Insurance of Machineries >P 12,000. 3. Of the following costs, how much is the prime cost? Direct Labor> P 50,000. Factory Rent >P 10,000. Indirect Labor >P10,000 . Salaries of Factory Supervisor >P35,000. Factory supplies used >P 5,000. Indirect Materials >P15,000. Direct Materials >P45,000. Salary of sales >P35,000. Insurance of Machineries >P 12,000.
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When calculating the predetermined manufacturing overhead rate, what is the correct basis of calculation? a.Estimated overhead costs divided by the estimated amount of the cost driver or allocation base b.Estimated amount of the cost driver divided by the estimated total overhead costs c.Estimated overhead costs divided by the number of days in a year d.Actual overhead costs of the prior year divided by the actual amount of the cost driver or allocation base
QUESTION: 1. IN THE COST RECONCILIATION REPORT UNDER THE FIFO METHOD, THE COSTS TO BE ACCOUNTED FOR EQUALS THE COST OF BEGINNING WORK IN PROCESS INVENTORY PLUS THE COST OF UNITS TRANSFERRED OUT. TRUE OR FALSE. PLEASE EXPLAIN. 2. WHEN THE PREDETERMINED OVERHEAD RATE IS BASED ON DIRECT LABOR-HOURS, THE AMOUNT OF OVERHEAD APPLIED TO A JOB IS PROPORTIONAL TO THE ESTIMATED AMOUNT OF DIRECT LABOR-HOURS FOR THE JOB. TRUE OF FALSE.