Refer to the data in E17-19. Brooks accountant found an error in her 2012 cost records. Depreciation
Question:
Finished goods inventory . . . . . . . $ 131,000
Cost of goods sold . . . . . . . . . . . . . . 580,000
Data from E 17-19
Manufacturing overhead costs . . . . . . . . $ 840,000
Direct labor costs . . . . . . . . . . . . . . . . . . 1,550,000
Machine hours . . . . . . . . . . . . . . . . . . 70,000 hours
At the end of 2012, the company had actually incurred:
Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,160,000
Depreciation on manufacturing property,
plant, and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000
Property taxes on plant . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Sales salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,500
Delivery drivers’ wages . . . . . . . . . . . . . . . . . . . . . . . . 23,500
Plant janitor’s wages . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,000
Machine hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,000 hour
Requirements
1. Use a T-account to determine whether manufacturing overhead is under-allocated or over-allocated, and by how much.
2. Prepare the journal entry to close out the under-allocated or over-allocated manufacturing overhead.
3. What is the adjusted ending balance of Cost of goods sold?
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Related Book For
Financial and Managerial Accounting
ISBN: 978-0132497978
3rd Edition
Authors: Horngren, Harrison, Oliver
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