Investment in Debt securities: Debt securities are financing instrument which represents the loan taken from the lender and usually these securities pay defined interest rate on the amount borrowed. The several types of debt instruments are bonds, certificate of deposits, preferred stock , corporate bonds etc. The investment in debt securities is classified under following categories: 1. Held to maturity: Held to maturity is a type of debt investment that the investor intends to hold until maturity. These securities are recorded at amortized cost. 2. Trading: Trading securities are purchased by the investor for the purpose to sell within a short-term period to each profit. These securities are recorded at their fair value and any gain or loss is recognized in the income statement for that period. 3. Available for sale: All the other securities are considered as available for sale and these securities are recorded at their fair value and any gain or loss is recognized unrealized gain or loss until the securities are actually sold. To determine: The circumstances under which the long-term investments in debt securities are reported at cost and adjusted for the amortization of the difference between cost and the maturity value.

Question

Orville Manufacturing Company's work-in-process inventory on August 1 has a balance of $32,400, representing Job No. 527. During August, $61,500 of direct materials were requisitioned for Job No. 527, and $42,800 of direct labor cost was incurred on Job No. 527. Manufacturing overhead is allocated at 125% of direct labor cost. Actual manufacturing overhead costs incurred in August amounted to $52,500. No new jobs were started during August. Job No. 527 is completed on August 28. Is manufacturing overhead overallocated or underallocated for the month of August and by how much? Answer

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Question

Chapter 15, Problem 9DQ

To determine

Introduction:

Investment in Debt securities: Debt securities are financing instrument which represents the loan taken from the lender and usually these securities pay defined interest rate on the amount borrowed. The several types of debt instruments are bonds, certificate of deposits, preferred stock, corporate bonds etc. The investment in debt securities is classified under following categories:

1. Held to maturity: Held to maturity is a type of debt investment that the investor intends to hold until maturity. These securities are recorded at amortized cost.

2. Trading: Trading securities are purchased by the investor for the purpose to sell within a short-term period to each profit. These securities are recorded at their fair value and any gain or loss is recognized in the income statement for that period.

3. Available for sale: All the other securities are considered as available for sale and these securities are recorded at their fair value and any gain or loss is recognized unrealized gain or loss until the securities are actually sold.

To determine: The circumstances under which the long-term investments in debt securities are reported at cost and adjusted for the amortization of the difference between cost and the maturity value.

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