Wixis Cabinets makes custom wooden cabinets for high-end stereo systems from specialty woods. The company uses a
Question:
The results of a recent month's operations appear below:
Sales ......................................................... $43,740
Beginning inventories ....................................... $0
Ending inventories ............................................ $0
Direct materials .......................................... $5,350
Direct labor (all variable) ........................... $8,860
Manufacturing overhead incurred ............ $14,220
Selling and administrative expense ............ $8,180
Actual hours of bandsaw use .......................... 150
Required:
1. Prepare an income statement following the example in Appendix 5A in which any under applied overhead is directly recorded on the income statement as an expense.
2. Why is overhead ordinarily under applied when the predetermined overhead rate is based on capacity?
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Related Book For
Managerial Accounting for Managers
ISBN: 978-0073527130
2nd edition
Authors: Eric Noreen, Peter Brewer, Ray Garrison
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