At the end of year 2010, Luke Maximillian Company's accounts exhibited a credit balanceof $66,000 in Manufacturing Overhead Control. Additionally, the firm have the givenaccount balances:Work in Process Inventory$384,000Finished Goods Inventory96,000Cost of Goods Sold720,000a. If the balance is considered immaterial, prepare the necessary journal entry to closethe overhead account.b. If the balance is considered material, prepare the necessary journal entry to close theoverhead account.c. Which method is more appropriate for the company? and why?

Solution:- a)Preparation of necessary journal entry to close the overhead account if the balance is…

a. If the balance is considered immaterial, prepare the necessary journal entry to closS the overhead account. b. If the balance is considered material, prepare the necessary journal entry to close th overhead account. c. Which method is more appropriate for the company? and why?

a. If the balance is considered immaterial, prepare the necessary journal entry to closS the overhead account. b. If the balance is considered material, prepare the necessary journal entry to close th overhead account. c. Which method is more appropriate for the company? and why?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Identify the journal entry for abnormal wastage. a. Dr.Material inventory, Cr.Production overheads…

A: There are two types of loss in process costing 1. Normal loss and 2. Abnormal loss Normal Loss…

Q: Which of the following is not true about the manufacturing overhead ledger account? Group of answer…

A: The manufacturing overhead is related to the entire cost. Example of indirect costs generally…

Q: A responsibility accounting system utilizes and assigns costs on the basis of their a.…

A: With the use of a responsibility accounting system, performance and accountability may be evaluated…

Q: There must be a correlation between the activity and changes in the amount of overhead. True /…

A: Correlation:-It refers to the statistical relationship between two variables or activities.…

Q: Explain the accounting treatment required when a change is made to the estimated service life of a…

A: When a change is made to the estimated service life of a machine, then the accounting treatment for…

Q: rpose of the following control procedures (i.e., what threats is it designed to mitigate)? b.…

A: Following are the Purpose of Control Procedures of Reconciliation of labor costs (based on job-time…

Q: In the Excel, or spreadsheet, approach to recording financial transactions, if manufacturing…

A: Manufacturing overhead means all indirect costs related to production or manufacturing of products.…

Q: Farr Co. adopted the dollar-value LIFO inventory method on December 31, 2014. Farr's entire…

A: Base inventory = Year end price / Index Base inventory = $660,000/110% Base inventory = $600,000

Q: Explain the costbenefits principles and how this affects the reliability and relevance of the…

A: Relevance refers to the concept or an idea that whatever information that is provided by the…

Q: Requirement 3. Prepare the journal entry transferring Job M1 to finished goods. (Record debits…

A: For job M1 As calculated in req : 2 • Direct materials $78,000 •Direct manufacturing labor…

Q: The risks associated with the company’s conversion cycle are: a)Material usage is not properly…

A: Cash Conversion cycle is the duration of time taken by a company to convert its = Cash- Raw…

Q: Give the journal entry for raw materials purchased on account. Explain how this transaction affects…

A: Raw materials inventory: Raw material inventories are the primary materials which are used in the…

Q: When materials are received, employees count and inspect them and record the items’ quantity and…

A: Inventory management is all about keeping track of a company's goods or products. It involves…

Q: Which of the following cost includes determining how much to order, cost of invoices, clerical labor…

A: Sunk cost refers to money that has already been spent and which can not be recovered. Sunk costs are…

Q: Overhead needs to be allocated only to "jobs" but not to "processes

A: Overheads represents expenditure on labour,materials that cant be economically identified with…

Q: Classify the line items below as per cost of quality: 1.Procedure verification 2. Training to…

A: Cost of quality comprises of prevention cost, appraisal cost, internal failure cost and external…

Q: line i When the manufacturing overhead costs applied in a period exceeds the actual manufacturing…

A: Yes, that's correct. In accounting, manufacturing overhead refers to the indirect costs incurred…

Q: At the end of the accounting period manufacturing overhead will be either over- applied or under-…

A: At the beginning of the period, the entities determine a pre-determined rate using the estimated…

Q: 1. Which of the following is NOT a key characteristic of Conformance Costs? a) They include expenses…

A: Conformance costs, also known as prevention or appraisal costs, are expenses incurred to ensure…

Q: 1. Distinguish between financial and managerial accounting for (a) first users of reports, (b) types…

A: “Since you have posted multiple questions, we will provide the solution only to the first question…

Q: Discuss the difficulties associated with manual cost accounting and how the organization may improve…

A: Various difficulties associated with manual cost accounting system are as under : a.) Manual entry…

Q: Overhead costs are overapplied if the amount applied to Work in Process is: a. less than actual…

A: The overhead costs refer to the costs that are incurred in the operating and manufacturing process,…

Q: During an accounting period, which production account is debited and credited many times? A.…

A: Manufacturing overheads are all indirect expenses related to manufacturing of products like indirect…

Q: Prepare the journal entries to record the assignment of (1) direct materials, (2) direct labor, and…

A: Overhead rate = total overhead cost / base activityOverhead will be applied to activities using this…

Q: Classify the following activities as part of the identifying (I), recording (R), or communicating…

A: Accounting: Accounting is a system, or a process of collecting and organizing economic…

Q: What do you believe would occur if a business did not use a work cost sheet? What exact things are…

A: A work cost sheet depicts the various cost incurred from manufacturing to selling any number of…

Q: A job order cost system identifies costs with a particular job rather than with a set time period. O…

A: Job costing includes the aggregation of the expenses of materials, overhead and labor for a…

Q: Briefly describe two ways of closing out overapplied or underapplied overhead at the end of an…

Q: In the expenditure cycle documents, who is responsible for custodial function of the company and the…

A: Expenditure Cycle includes all the activities starting from Acquisition of goods and services to the…

Q: How different in management accounting from cost accounting? Provide a brief commentary in two…

A: Definition: Accounting: Accounting is the process of recording, summarizing, and reporting all the…

Q: Which of the following is correct with respect to closing out underapplied marufacturing overhead to…

A: A predetermined overhead rate is calculated by dividing the estimated overhead by the estimated…

Q: How do accounting books handle overhead overabsorption and underabsorption?

A: Overheads are the basic cost component of any product or service. It basically comprises of the…

Q: Overhead costs are overapplied if the amount applied to Work in Process is: a. equal to actual…

A: The correct answer is Option b. Less than actual overhead incurred.

Question

At the end of year 2010, Luke Maximillian Company's accounts exhibited a credit balance
of $66,000 in Manufacturing Overhead Control. Additionally, the firm have the given
account balances:
Work in Process Inventory
$384,000
Finished Goods Inventory
96,000
Cost of Goods Sold
720,000
a. If the balance is considered immaterial, prepare the necessary journal entry to close
the overhead account.
b. If the balance is considered material, prepare the necessary journal entry to close the
overhead account.
c. Which method is more appropriate for the company? and why?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

You are a newly appointed accountant and have been asked to place a cost on the amount of wasted paper coming from the organisation. How might you do this?
Which among the following is not a non volume related support activity? a. Production scheduling b. Labour hours c. Production set up d. Data processing please i want answer fastly without explaination.
Please answer D
An example of a nonproduction cost is a.wages paid to assembly-line employees. b.manufacturing supplies. c.the treasurer's salary. d.insurance on manufacturing facilities.
Explain the accounting treatment required when a change is made to the estimated service life of equipment.
A just want the answer , no need for steps
Overhead costs are overapplied if the amount applied to Work in Process is: O a. less than actual overhead incurred. O b. None of the given answer is correct c. greater than actual overhead incurred. Fin O d. greater than estimated overhead. O e. less than estimated overhead.
3. What accounts are debited / credited for overhead cost incurred vs overhead cost applied?
When materials are used as indirect materials, their cost is debited to Facotry or Manufacturing overhead account. TRUE FALSE
What is the difference between intermediate products and final products in management accounting?
What features of the cost accounting system would be expected to prevent the omission ofrecording materials used in production?
?Which of the following costs is not related to a batch-related activity .Compliance costs .a O .Machine setups .b O .Shipping costs .c O „Material handling .d O