rajharsh12527

rajharsh12527

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rajharsh12527

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Finlon Upholstery, Inc. uses a job-order costing system toaccumulate manufacturing costs. The company’s work-in-process onDecember 31, 20x1, consisted of one job (no. 2077), which wascarried on the year-end balance sheet at $156,800. There was nofinished-goods inventory on this date.

Finlon applies manufacturing overhead to production on the basisof direct-labor cost. (The budgeted direct-labor cost is thecompany’s practical capacity, in terms of direct-labor hours,multiplied by the budgeted direct-labor rate.) Budgeted totals for20x2 for direct labor and manufacturing overhead are $4,200,000 and$5,460,000, respectively. Actual results for the year follow.

Direct materialused $ 5,600,000
Direct labor 4,350,000
Indirect material used 64,000
Indirect labor 2,860,000
Factory depreciation 1,740,000
Factory insurance 58,000
Factory utilities 828,000
Selling and administrativeexpenses 2,160,000
Total $ 17,660,000

Job no. 2077 was completed in January 20x2; there was no work inprocess at year-end. All jobs produced during 20x2 were sold withthe exception of job no. 2143, which contained direct-materialcosts of $155,000 and direct-labor charges of $85,000. The companycharges any under- or overapplied overhead to Cost of GoodsSold.

1. Determine the company’s predetermined overhead applicationrate.

2. Determine the additions to the Work-in-Process Inventoryaccount for direct material used, direct labor, and manufacturingoverhead.

3. Compute the amount that the company would disclose asfinished-goods inventory on the December 31, 20x2, balancesheet.

4. a.) Compute the amount of under- or overapplied overhead atyear-end.

b.) Prepare the necessary journal entry to record itsdisposition.

5. Determine the company’s 20x2 cost of goods sold.

6. Would it be appropriate to include selling and administrativeexpenses in either manufacturing overhead or cost of goods sold?Yes or No

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Finlon Upholstery Inc. uses a job-order costing system toaccumulate manufacturing costs. The company's work-in-process onDecember 31, 2001, consisted of one job (no. 2077), which wascarried on the year-end balance sheet at $156,800. There was nofinished-goods inventory on this date.

Finlon applies manufacturing overhead to production on the basisof direct-labor cost. (The budgeted direct-labor cost is thecompany's practical capacity, in terms of direct-labor hoursmultiplied by the budgeted direct-labor rate.) Budgeted totals for2002 for direct labor and manufacturing overhead are $4,200,000 and$5,460,000, respectively. Actual results for the year are asfollows:

Actual Results
Direct Materials Used $5,600,000.00
Direct Labor $4,350,000.00
Indirect Material Used $65,000.00
Indirect Labor $2,860,000.00
Factory Depreciation $1,740,000.00
Factory Insurance $59,000.00
Factory Utilities $830,000.00
Selling and Administrative Expenses $2,160,000.00
Total $17,664,000.00

Job no. 2077 was completed in January 2002, and there was nowork in process at year-end. All jobs produced during 2002 weresold with the exception of Job no. 2143, which containeddirect-material costs of $156,000 and direct-labor charges of$85,000. The company charges any under- or over-applied overhead tothe cost of goods sold category.

Using the above information, do the following:

Calculate the company’s predetermined overhead applicationrate.

Calculate the additions to the work-in-process inventory accountfor the direct material used, direct labor, and manufacturingoverhead.

Calculate the finished-goods inventory for the 12/31/02 balancesheet.

Calculate the over-applied or under-applied overhead atyear-end.

Explain if it is appropriate to include selling andadministrative expenses in the cost of goods sold category.

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ABC Upholstery uses a job-order costing system to accumulate manufacturing costs. The company’s work-in-process on Dec. 31, 2015, consisted of one job (Job 2077), which was carried on the year-end balance sheet at $156,800. There was no finished-goods inventory on this date.

ABC applies manufacturing overhead to production on the basis of direct-labour cost. Budgeted totals for 2016 for direct labour and manufacturing overhead are $4,200,000 and $5,460,000, respectively. Actual results for the year follow:

Direct material used $ 5,600,000

Direct labour $ 4,350,000

Indirect material used $ 65,000

Indirect labour $ 2,860,000

Factory depreciation $ 1,740,000

Factory insurance $ 59,000

Factory utilities $ 830,000

Selling & Administrative expenses $ 2,160,000

Total $17,664,000

Job 2077 was completed in January 2016; there was no work-in-process at year end. All jobs produced during 2016 were sold with the exception of Job 2143, which contained direct-material costs of $156,000 and direct-labour charges of $85,000. The company charges any under- or overapplied overhead to cost of goods sold.

REQUIRED:

Determine the company’s predetermined overhead application rate.

Determine the additions to the Work-in-process inventory account for direct material used, direct labour and manufacturing overhead.

Compute the amount the company would disclose as finished-goods inventory on the December 31, 2016, balance sheet.

Compute the amount of under- or overapplied overhead at year-end.

Determine the company’s 2016 cost of goods sold.

Would it be appropriate to include selling and administrative expenses in either manufacturing overhead or cost of goods sold? Briefly explain.

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