161.Chen Service applied overhead on the basis of direct labor costs during the current year. Overhead applied was $16,500. Actual overhead incurred was $17,200.
(a) Prepare a journal entry to remove this difference assuming that it is not material.
(b) Instead, assume actual overhead incurred was $24,000. Describe (without computations) the alternative procedure that Chen might assuming this difference is material.
162.Calwell Corp. uses a job order costing system. Four jobs were started during the current year. The following is a record of the costs incurred:
Job #Material
UsedDirect Labor
UsedDirect Labor
Hours Used
1010$45,000$72,0008,000
101159,00077,0007,000
101235,00030,0003,000
101326,00040,0005,000
Actual overhead costs were $55,800. The predetermined overhead rate is $2.40 per direct labor hour. During the year, Jobs 1010, 1012, and 1013 were completed. Also, Jobs 1010 and 1013 were sold for $387,000. Assuming that this is Calwell's first year of operations:
(a) Make the necessary journal entries to charge the costs to the jobs started and to record the completion and sale of finished jobs.
(b) Calculate the balance in the Work in Process Inventory, Finished Goods Inventory, and Factory Overhead accounts. Does the Factory Overhead account balance indicate an over- or underapplied overhead?
163.The following information is available for the Annum Corporation for the current year:
Cost of goods sold$292,000
Depreciation of factory equipment25,200
Direct labor64,750
Finished goods inventory, Beginning-year45,000
Factory insurance11,200
Factory utilities16,800
Goods transferred from Work in Process Inventory to Finished Goods Inventory285,150
Indirect labor8,400
Raw materials inventory, Beginning-year4,200
Raw materials purchased116,200
Raw materials used in production (includes $7,000 of indirect materials)121,800
Rent on factory building22,400
Annum Company uses a predetermined overhead rate of 150% of direct labor cost. Prepare journal entries for the following transactions and events:
(a) Purchase of raw materials on account.
(b) Assignment of materials costs to Work in Process Inventory and Factory Overhead.
(c) Assignment of Factory Payroll to Work in Process Inventory and Factory Overhead.
(d) Recording of other factory overhead. Assume that all items other than depreciation are paid in cash.
(e) Assignment of Factory Overhead to Work in Process Inventory.
(f) Transfer of goods completed to Finished Goods Inventory.
(g) Recording cost of goods sold.
(h) Assignment of over- or underapplied overhead to Cost of Goods Sold.