Winston Manufacturing uses direct labor cost to apply overhead to its production. The budgeted direct labor cost and budgeted manufacturing overhead were $400,000 and $480,000, respectively. The following cost data were experienced last year: Material inventory, 1/1/04 $ 10,000 Material inventory, 12/31/04 2,000 Work-in-process, 1/1/04 12,000 Finished goods, 1/1/04 33,000 Finished goods, 12/31/04 23,000 Purchases of material 61,000 Direct labor incurred 45,000 Indirect material 13,000 Indirect labor 12,000 Other manufacturing overhead 20,000 Unadjusted cost of goods sold 170,000 1. Close the over/under applied overhead to cost of goods sold (journal entry).2. Prorate the over/under applied overhead to the proper accounts using the ending account balances for prorating (journal entry).3. Prepare the cost of goods manufactured statement.cost of goods manufactured statement.
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