X Company Reported the Following Actual Cost Data for the Year

question 66

Essay

X Company reported the following actual cost data for the year:
X Company used a 150% predetermined overhead rate based on direct labour cost.The rate was based on annual estimated overhead cost and direct labour cost of $252,000 and $168,000,respectively.
Required:
a.Calculate the cost of goods manufactured.
b.What was the cost of goods sold before adjusting for any under or overapplied overhead?
c.By how much was manufacturing overhead cost under or overapplied?
d.Prepare a summary journal entry to close any under or overapplied manufacturing overhead cost to cost of goods sold.Is such an entry appropriate in this situation? Why or why not?
e.Analyze the under or overapplied manufacturing overhead costs calculated in part c above into two separate components: amount due to incorrect estimate of the annual manufacturing overhead costs and an amount due to incorrect estimate of the annual direct labour cost.

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Definitions:

Scalawags

A derogatory term used during the Reconstruction era in the United States to describe Southern whites who supported Reconstruction and the Republican Party.

Fourteenth Amendment

An amendment to the U.S. Constitution, ratified in 1868, that granted citizenship and equal civil and legal rights to African Americans and slaves who had been emancipated.

States

Administrative divisions within a country, possessing certain governmental powers as defined by the nation's constitution or by historical precedent.

Thaddeus Stevens

A distinguished politician and abolitionist from the 19th century in the U.S., recognized for his pivotal role in the enactment of the 13th Amendment that eradicated slavery.