Question

3-1 3-2 3-3 3-4 3-5 What is the link that connects the schedule of cost of goods manufactured to the schedule of cost of goods sold? What account is credited when overhead cost is applied to Work in Process? Would you expect the amount of overhead applied for a period to equal the actual overhead costs of the period? Why or why not? What is underapplied overhead? Overapplied overhead? What disposition is made of these amounts at the end of the period? Provide two reasons why overhead might be underapplied in a given year. What adjustment is made for underapplied overhead on the schedule of cost of goods sold? What adjustment is made for overapplied overhead? How do you compute the raw materials used in production? How do you compute the total manufacturing costs within a schedule of cost of goods manufactured? How do you compute the cost of goods manufactured? How do you compute the unadjusted cost of goods sold? How do direct labor costs flow through a job-order costing system? 3-6 3-7 3-8 3-9 3-10

please answer each one individually thank you

Answer 1

Solution:

3-1 Schedule of cost of goods manufactured is used to calculate the cost of goods manufactured during the period. Later, this amount is transferred to schedule of cost of goods sold where necessary adjusted are made to finished goods inventory to calculate the amount of cost of goods sold. 3-2 Manufacturing Overhead account is credited when overhead cost is applied to work in Process. No, generally amount of overhead applied for a period is not equal to the actual overhead costs of the period, as applied overhead is estimated based on predetermined overhead rate. 3-3 Underapplied overhead arises when applied overhead is less than the actual overhead incurred. While, overapplied overhead arises when applied overhead is greater than the actual overhead incurred. Underapplied or overapplied overhead is disposed off either by allocating it among work in process, finished goods and cost of goods sold accounts or transferring the entire amount to cost of goods sold account. 3-4 Overhead cost is estimated and applied based on a predetermined overhead rate. Overhead cost might be underapplied either when costs are not properly monitored and controlled or when overhead cost consists of much fixed cost which does not change proportionately