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New Age Electronics manufactures surround sound systems and allocates overhead costs using direct-labor hours. They pay their assembly line workers $15 per hour. Unadjusted Cost of Goods Sold for the year was $598,500. Estimated accounting information for the year is as follows: Overhead costs Direct materials $140,000 $355,000 Direct labor costs (7,000 hours @ $15/hour) $105,000 Direct labor hours Machine hours 7,000 8,000 Actual accounting information incurred for the year was as follows: Direct materials $350,000 Direct labor (7,100 hours @ $15/hour) $106,500 Production Manager's Salary $25,000 Customer 800# order line $ 2,000 Plant rent $ 75,000 Depreciation on plant and equipment $ 50,000 Marketing expense $ 20,000 Plant utilities Indirect materials Delivery expenses to customers $ 5,000 Depreciation on office equipment $5,000 Machine hours $ 19,000 $1,000 7,900 What amount of overhead was allocated/applied? What actual amount of overhead costs were incurred? Was overhead under or over allocated/applied and by how much? What is the adjusted Cost of Goods Sold amount?

New Age Electronics manufactures surround sound systems and allocates overhead costs using direct-labor hours. They pay their assembly line workers $15 per hour. Unadjusted Cost of Goods Sold for the year was $598,500. Estimated accounting information for the year is as follows: Overhead costs Direct materials $140,000 $355,000 Direct labor costs (7,000 hours @ $15/hour) $105,000 Direct labor hours Machine hours 7,000 8,000 Actual accounting information incurred for the year was as follows: Direct materials $350,000 Direct labor (7,100 hours @ $15/hour) $106,500 Production Manager's Salary $25,000 Customer 800# order line $ 2,000 Plant rent $ 75,000 Depreciation on plant and equipment $ 50,000 Marketing expense $ 20,000 Plant utilities Indirect materials Delivery expenses to customers $ 5,000 Depreciation on office equipment $5,000 Machine hours $ 19,000 $1,000 7,900 What amount of overhead was allocated/applied? What actual amount of overhead costs were incurred? Was overhead under or over allocated/applied and by how much? What is the adjusted Cost of Goods Sold amount?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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New Age Electronics manufactures surround sound systems and allocates overhead costs using direct-labor hours. They pay their assembly line workers $15 per hour. Unadjusted Cost of Goods Sold for the year was $598,500. Estimated accounting information for the year is as follows: Overhead costs Direct materials $140,000 $355,000 Direct labor costs (7,000 hours @ $15/hour) $105,000 Direct labor hours Machine hours 7,000 8,000 Actual accounting information incurred for the year was as follows: Direct materials $350,000 Direct labor (7,100 hours @ $15/hour) $106,500 Production Manager's Salary $25,000 Customer 800# order line $ 2,000 Plant rent $ 75,000 Depreciation on plant and equipment $ 50,000 Marketing expense $ 20,000 Plant utilities Indirect materials Delivery expenses to customers $ 5,000 Depreciation on office equipment $5,000 Machine hours $ 19,000 $1,000 7,900 What amount of overhead was allocated/applied? What actual amount of overhead costs were incurred? Was overhead under or over allocated/applied and by how much? What is the adjusted Cost of Goods Sold amount?
Transcribed Image Text:New Age Electronics manufactures surround sound systems and allocates overhead costs using direct-labor hours. They pay their assembly line workers $15 per hour. Unadjusted Cost of Goods Sold for the year was $598,500. Estimated accounting information for the year is as follows: Overhead costs Direct materials $140,000 $355,000 Direct labor costs (7,000 hours @ $15/hour) $105,000 Direct labor hours Machine hours 7,000 8,000 Actual accounting information incurred for the year was as follows: Direct materials $350,000 Direct labor (7,100 hours @ $15/hour) $106,500 Production Manager's Salary $25,000 Customer 800# order line $ 2,000 Plant rent $ 75,000 Depreciation on plant and equipment $ 50,000 Marketing expense $ 20,000 Plant utilities Indirect materials Delivery expenses to customers $ 5,000 Depreciation on office equipment $5,000 Machine hours $ 19,000 $1,000 7,900 What amount of overhead was allocated/applied? What actual amount of overhead costs were incurred? Was overhead under or over allocated/applied and by how much? What is the adjusted Cost of Goods Sold amount?
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