Applied vs. Actual Manufacturing Overhead Davis Manufacturing Corporation applies manufactur- ing overhead on the basis of 140%
Question:
Applied vs. Actual Manufacturing Overhead Davis Manufacturing Corporation applies manufactur- ing overhead on the basis of 140% of direct labor cost. An analysis of the related accounts and job order cost sheet indicates that during the year total manufacturing overhead incurred was \($315,000\) and that at year-end Work-in-Process Inventory, Finished Goods Inventory, and Cost of Goods Sold included \($40,000\), \($20,000\), and \($140,000\), respectively, of direct labor incurred during the current year.
a. Determine the underapplied manufacturing overhead at year-end (assume it is significant).
b. Prepare a journal entry to record the disposition of the underapplied manufacturing overhead.
Step by Step Answer:
Managerial Accounting For Undergraduates
ISBN: 9781618533098
2nd Edition
Authors: James Wallace, Scott Hobson, Theodore Christensen