ACC 220 Chapter 3 Problem Session Activity

When closing underapplied manufacturing overhead to COGS, which of the following would be true?

• Cost of goods sold will increase

• Gross Margin will increase

• Selling and administrative expenses will decrease

• Net income will increase

Wolfpack Inc. has provided the following data for the month of March. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month.

The company allocates any underapplied or overapplied manufacturing overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

The journal entry to record the allocation of any underapplied or overapplied manufacturing overhead for January would include the following:

• Credit to Work in Process of $12,390

• Debit to Work in Process of $1,200

• Debit to Work in Process of $12,390

• Credit to Work in Process of $1,200

During September at Disney Corporation, $85,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $5,000. The journal entry to record this requisition would include a debit to Manufacturing Overhead of:

• $85,000

• $5,000

• $0

• $90,000

Calfee Corporation is a manufacturer that uses job-order costing. The company has supplied the following data for the just completed year (pictured)

The ending balance in the Work in Process inventory account is:

• $56,000

• $102,000

• $35,000

• $89,000

Wuf Corporation is a manufacturer that uses job-order costing. The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year. The company has supplied the following data for the just completed year (pictured)

The net operating income is:

• $1,111,850

• $1,336,000

• $792,850

• $675,750

Pack-a-Palooza Inc. uses a job-order costing system and started the month of May with a zero balance in its work in process and finished goods inventory accounts. During October, Pack-a Palooza worked on three jobs and incurred the following direct costs on those jobs (pictured)

Kapanga applies manufacturing overhead at a rate of 160% of direct labor cost. During May, Pack-a-Palooza completed Jobs B123 and B456 and sold Job B456. How much is Kapanga's cost of goods manufactured for October?

• $72,000

• $66,000

• $84,000

• $96,800

Tuffy Corporation had $44,000 of raw materials on hand on June 1. During the month, the Corporation purchased an additional $58,000 of raw materials. The journal entry to record the purchase of raw materials would include a:

• Debit to Raw Materials of $102,000

• Credit to Raw Materials of $58,000

• Debit to Raw Materials of $58,000

• Credit to Raw Materials of $102,000

If manufacturing overhead is overapplied, then:

• Actual manufacturing overhead cost is more than estimated manufacturing overhead cost

• The amount of manufacturing overhead cost applied to Work in Process is more than the actual manufacturing overhead cost incurred

• The predetermined overhead rate is too low

• The Manufacturing Overhead account will have a debit balance at the end of the year

Bricks Corporation is a manufacturer that uses job-order costing. The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year. The company has supplied the following data for the just completed year (pictured)

The cost of goods available for sale is:

• $1,444,000

• $1,598,000

• $1,200,750

• $1,526,000

True or False: Applied manufacturing overhead is a debit, while incurred manufacturing overhead is a credit

• True

• False