Exercise 7-35 (Static) Prorate Over- or Underapplied Overhead (LO 7-3) Linzee Liners estimates that its manufacturing overhead will be $1,725,000 in Year 1. It further estimates that direct labor costs will amount to $750,000. During March, Linzee worked on four jobs with actual direct labor costs of $35,000 for Job 0301, $22,500 for Job 0302, $32,000 for Job 0303, and $16,000 for Job 0304. Actual manufacturing overhead costs for the year were $1,710,000. Actual direct labor costs for the year were $735,000. Manufacturing overhead is applied to jobs based on direct labor costs using predetermined rates. The amount of overhead applied in each of the inventory accounts at the end of Year 1 is as follows: Work-in-process inventory $ 33,810 $ 270,480 Finished goods inventory Cost of goods sold $ 1,386,210 Required: Prepare an entry to allocate the over- or underapplied overhead. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet Record an entry to allocate the over- or underapplied overhead. Note: Enter debits before credits. Transaction 1 Record entry General Journal Clear entry Debit Credit View general journal
Exercise 7-35 (Static) Prorate Over- or Underapplied Overhead (LO 7-3) Linzee Liners estimates that its manufacturing overhead will be $1,725,000 in Year 1. It further estimates that direct labor costs will amount to $750,000. During March, Linzee worked on four jobs with actual direct labor costs of $35,000 for Job 0301, $22,500 for Job 0302, $32,000 for Job 0303, and $16,000 for Job 0304. Actual manufacturing overhead costs for the year were $1,710,000. Actual direct labor costs for the year were $735,000. Manufacturing overhead is applied to jobs based on direct labor costs using predetermined rates. The amount of overhead applied in each of the inventory accounts at the end of Year 1 is as follows: Work-in-process inventory $ 33,810 $ 270,480 Finished goods inventory Cost of goods sold $ 1,386,210 Required: Prepare an entry to allocate the over- or underapplied overhead. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet Record an entry to allocate the over- or underapplied overhead. Note: Enter debits before credits. Transaction 1 Record entry General Journal Clear entry Debit Credit View general journal
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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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Transcribed Image Text:Exercise 7-35 (Static) Prorate Over- or Underapplied Overhead (LO 7-3)
Linzee Liners estimates that its manufacturing overhead will be $1,725,000 in Year 1. It further estimates that direct labor costs will
amount to $750,000. During March, Linzee worked on four jobs with actual direct labor costs of $35,000 for Job 0301, $22,500 for
Job 0302, $32,000 for Job 0303, and $16,000 for Job 0304. Actual manufacturing overhead costs for the year were $1,710,000.
Actual direct labor costs for the year were $735,000. Manufacturing overhead is applied to jobs based on direct labor costs using
predetermined rates.
The amount of overhead applied in each of the inventory accounts at the end of Year 1 is as follows:
Work-in-process inventory
$ 33,810
$ 270,480
Finished goods inventory
Cost of goods sold
$ 1,386,210
Required:
Prepare an entry to allocate the over- or underapplied overhead.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
View transaction list
Journal entry worksheet
A
Record an entry to allocate the over- or underapplied overhead.
Note: Enter debits before credits.
Transaction
1
Record entry
General Journal
Clear entry
Debit
Credit
View general journal
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