Door Company estimated manufacturing overhead costs for 2009 at $378,000. The predetermined manufacturing overhead rate was based on 105,000 estimated direct labor hours. Actual direct labor hours for 2009 totaled 110,000. The manufacturing overhead account showed debit entries totaling $394,000. For the year, was overhead over or underallocated and by how much?
A) $16,000 underallocated
B) $2,000 overallocated
C) $2,000 underallocated
D) $16,000 overallocated
Answer: B
Actual manufacturing overhead for the current period is $19,600 while allocated manufacturing overhead for the current period is $18,700. What is the proper entry to dispose of the manufacturing overhead balance?
A) debit cost of goods sold and credit manufacturing overhead for $900
B) debit cost of goods sold and credit finished goods inventory for $900
C) debit manufacturing overhead and credit cost of goods sold for $900
D) debit manufacturing overhead and credit work in process inventory for $900
Answer: A
Manufacturing overhead is overallocated $1,000 at the end of the current period. The journal entry to dispose of the overallocated overhead balance involves a debit to:
A) manufacturing overhead and a credit to cost of goods sold for $1,000
B) cost of goods sold and a credit to manufacturing overhead for $1,000
C) manufacturing overhead and a credit to work in process inventory for $1,000
D) cost of goods sold and a credit to finished goods inventory for $1,000
Answer: A
