Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products based on machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,068,000 of total manufacturing overhead for an estimated activity level of 89,000 machine-hours. During the year, a large quantity of furniture on the market caused Luzadis to cut production and build inventories. The company provided the following data for the year: Machine-hours Manufacturing overhead cost Inventories at year-end: Raw materials Work in process (includes overhead applied of $44,400) Finished goods (includes overhead applied of $150,960) Cost of goods sold (includes overhead applied of $692,640) Required: 1. Compute the underapplied or overapplied overhead. 74,000 $ 1,029,000 $ 10,000 $ 91,000 $ 309,400 $ 1,419,600 2. Assume the company closes underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry. 3. Assume the company allocates underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry. 4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold? Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products based on machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,068,000 of total manufacturing overhead for an estimated activity level of 89,000 machine-hours. During the year, a large quantity of furniture on the market caused Luzadis to cut production and build inventories. The company provided the following data for the year: Machine-hours Manufacturing overhead cost Inventories at year-end: Raw materials Work in process (includes overhead applied of $44,400) Finished goods (includes overhead applied of $150,960) Cost of goods sold (includes overhead applied of $692,640) Required: 1. Compute the underapplied or overapplied overhead. 74,000 $ 1,029,000 $ 10,000 $ 91,000 $ 309,400 $ 1,419,600 2. Assume the company closes underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry. 3. Assume the company allocates underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry. 4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold?
Expert Answer:
Answer rating: 100% (QA)
Luzadis Company Overhead Analysis 1 Underapplied or Overapplied Overhead Predetermined overhead rate Total estimated overhead cost Estimated activity ... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-0077522940
15th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
Students also viewed these accounting questions
-
Luzadis Company makes furniture using the latest automated technology. The company uses a job - order costing system and applies manufacturing overhead cost to products based on machine - hours. The...
-
WiCom Servicing completed these transactions during November 2020, its first month of operations: Required 1. Prepare journal entries to record the transactions. Use general journal page 1. 2. Set up...
-
The BMAC Company purchased land many years ago for $100,000 as a potential site for a new building. No building was ever constructed. A comparable lot near the site was recently sold for $350,000....
-
A 77-N force F1 and a 31-N m couple M1 are applied to corner E of the bent plate shown. If F1 and M1 are to be replaced with an equivalent force-couple system (F2, M2) at corner B and if (M2)z = 0,...
-
What competencies are required for global account management and do they differ from those required of the key account manager?
-
LIFT Elevator Company manufactures small hydroelectric elevators. One of the direct materials used is heavy-duty carpeting for the floor of the elevator. The direct materials quantity standard for...
-
Describe the concept of an abstraction layer in an operating system. How does it contribute to OS portability across different hardware architectures ?
-
Construct a class definition to represent an employee of a company. Each employee is defined by an integer ID number, a double-precision pay rate, and the maximum number of hours the employee should...
-
You have been presented with the following information for Bubble Traders that transpired during the month of July 2023. Date 1 3 5 9 Transaction The owner contributed an amount of R75 000 cash, as...
-
A lease agreement that qualifies as a finance lease calls for annual lease payments of $24,000 over a four-year lease term (also the asset's useful life), with the first payment on January 1, the...
-
A Tech has fixed costs of $9 million and profits of $5 million. Its competitor, Z Tech, is roughly the same size and this year earned the same profits, $5 million. But it operates with higher fixed...
-
What is real interest rate? What does it imply on the real rate of return of any investments? Discuss in details.
-
Common Stockholders' Profitability Analysis A company reports the following: Net income Preferred dividends Average stockholders' equity Average common stockholders' equity $195,000 7,800 1,477,273...
-
Write a paper on franchising strategies and management related issues in the gastronomy business sector of kentucky fried chicken in Germany.
-
Calculate the electrical conductivity of a fiber-reinforced polyethylene part that is reinforced with 20 vol % of continuous, aligned nickel fibers.
-
a. Using the DSA in Experiment 4A to generate open-loop Bode plots, what is the phase margin when the sample time is set to its default (0.00025 sec)? b. Repeat with a sample time of 0.0005 sec. c....
-
a. In Experiment 4A, set the sample frequency to 50 msec and measure the phase margin. b. Compare this with the phase margin with a 1-msec sample time (same as Question 1c). (DATA FROM QUETION 1C) c....
-
Assume that you have shorted the put option in Problem 4. a. If the stock is trading at \($8\) in three months, what will you owe? b. If the stock is trading at \($23\) in three months, what will you...
Study smarter with the SolutionInn App