Question: Why is it acceptable to close overallocated or underallocated manufacturing
Why is it acceptable to close overallocated or underallocated manufacturing overhead to Cost of goods sold rather than allocating it proportionately to Work in process inventory, Finished goods inventory, and Cost of goods sold? Under what circumstances would it be advisable to allocate the overallocated or underallocated manufacturing overhead to Work in process inventory, Finished goods inventory, and Cost of goods sold?
Answer to relevant QuestionsDescribe a situation that may cause manufacturing overhead to be overallocated in a given year. Also describe a situation that may cause manufacturing overhead to be underallocated in a given year. Trekker manufactures backpacks. Its plant records include the following materials-related transactions: Purchases of canvas (on account)............................................................ $70,000 Purchases of ...Lakeland Heating & Cooling installs and services commercial heating and cooling systems. Lakeland uses job costing to calculate the cost of its jobs. Overhead is allocated to each job based on the number of direct labour ...Refer to the data in Exercise 3-25A. Freeman’s accountant found an error in the expense records from the year reported. Depreciation on manufacturing plant and equipment was actually $400,000, not the $480,000 as ...Hamilton Feeders manufactures bird feeders for wild bird specialty stores. In September, Hamilton Feeders received an order from Wild Birds Inc. for 24 platform bird feeders. The order from Wild Birds Inc. became Job 1102 at ...
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