FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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6.
Disposition of Over- or Underapplied
inventory and cost of goods sold accounts of PGA Company at the end of the most recent year:
Work in Finished Cost of Goods
Process Goods Sold
Direct material .............................................................................. $ 5,000 $ 8,000 $ 11,000
Direct labor ................................................................................... 6,000 15,000 15,000
Applied overhead ......................................................................... 4,000 12,000 24,000
Year-end balance.......................................................................... $ 15,000 $ 35,000 $ 50,000
Applied overhead has already been closed to Factory Overhead Control.
Required:
Give the
(1) Overapplied overhead of $10,000 is to be allocated to inventories and Cost of Goods Sold in proportion
to the balances in those accounts.
(2) Underapplied overhead of $10,000 is to be allocated to inventories and Cost of Goods Sold in
proportion to the amounts of applied overhead contained in those accounts.
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