Question: Refer to the information in Exercise 2 13 In Exercise 2 13

Refer to the information in Exercise 2-13.
In Exercise 2-13, During the month of August, Star Plastics applied overhead to jobs using an overhead rate of $3 per dollar of direct labor, direct labor in August was $90,000. Actual overhead in August was $230,000. Assume that actual overhead was composed of the following items.
Indirect materials.......... $30,000
Indirect labor ............ 70,000
Utilities ............... 20,000
Depreciation ............. 60,000
Repair expense ............ 50,000
Total ................ $230,000

Required
a. Determine the balance in manufacturing overhead, and prepare a journal entry to close the balance to cost of goods sold.
b. Why is it important to close the balance in manufacturing overhead?
c. Assume that Star Plastics uses a JIT inventory system. What is the justiļ¬cation for assigning the balance in manufacturing overhead to Cost of Goods Sold rather than apportioning it to Work in Process, Finished Goods, and Cost of Goods Sold?


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  • CreatedSeptember 12, 2013
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