148. Hirschman Corporation has provided the following data for the month of April:
Required:
Prepare a Schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold in good
form.
149. Straley Inc. has provided the following data for the month of February. There were no
beginning inventories; consequently, the direct materials, direct labor, and manufacturing
overhead applied listed below are all for the current month.
Manufacturing overhead for the month was overapplied by $3,000.
The company allocates any underapplied or overapplied overhead among Work–in-Process,
finished goods, and cost of goods sold at the end of the month on the basis of the overhead
applied during the month in those accounts.
Required:
Provide the journal entry that would record the allocation of underapplied or overapplied among
Work-in-Process, finished goods, and cost of goods sold.
150. Alvardo Inc. has provided the following data for the month of November. There were no
beginning inventories; consequently, the direct materials, direct labor, and manufacturing
overhead applied listed below are all for the current month.
Manufacturing overhead for the month was underapplied by $6,000.
The company allocates any underapplied or overapplied overhead among Work–in-Process,
finished goods, and cost of goods sold at the end of the month on the basis of the overhead
applied during the month in those accounts.
Required:
Determine the cost of Work-in-Process, finished goods, and cost of goods sold AFTER allocation
of the underapplied or overapplied overhead for the period.
151. The management of Rainha Corporation would like to investigate the possibility of basing
its predetermined overhead rate on activity at capacity rather than on the estimated amount of
activity for the year. The company’s controller has provided an example to illustrate how this new
system would work. In this example, the allocation base is machine-hours and the estimated
amount of the allocation base for the upcoming year is 13,000 machine-hours. In addition,
capacity is 16,000 machine-hours and the actual activity for the year is 12,900 machine-hours. All
of the manufacturing overhead is fixed and is $29,120 per year. For simplicity, it is assumed that
this is the estimated manufacturing overhead for the year as well as the manufacturing overhead
at capacity and the actual amount of manufacturing overhead for the year.
Required:
a. Determine the predetermined overhead rate if the predetermined overhead rate is based on the
amount of the allocation base at capacity.
b. Determine the underapplied or overapplied overhead for the year if the predetermined overhead
rate is based on the amount of the allocation base at capacity.
7-137
152. The management of Scurlock Corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity rather than on the estimated
amount of activity for the year. The company’s controller has provided an example to illustrate
how this new system would work. In this example, the allocation base is machine-hours and the
estimated amount of the allocation base for the upcoming year is 19,000 machine-hours. In
addition, capacity is 21,000 machine-hours and the actual activity for the year is 18,200 machine–
hours. All of the manufacturing overhead is fixed and is $71,820 per year. For simplicity, it is
assumed that this is the estimated manufacturing overhead for the year as well as the
manufacturing overhead at capacity and the actual amount of manufacturing overhead for the
year.
Required:
a. Determine the predetermined overhead rate if the predetermined overhead rate is based on the
estimated amount of the allocation base.
b. Determine the underapplied or overapplied overhead for the year if the predetermined overhead
rate is based on the estimated amount of the allocation base.
c. Determine the predetermined overhead rate if the predetermined overhead rate is based on the
amount of the allocation base at capacity.
d. Determine the underapplied or overapplied overhead for the year if the predetermined overhead
rate is based on the amount of the allocation base at capacity.
7-139
153. The management of Gruwell Corporation would like to investigate the possibility of basing
its predetermined overhead rate on activity at capacity rather than on the estimated amount of
activity for the year. The company’s controller has provided an example to illustrate how this new
system would work. In this example, the allocation base is machine-hours and the estimated
amount of the allocation base for the upcoming year is 48,000 machine-hours. In addition,
capacity is 53,000 machine-hours and the actual activity for the year is 47,700 machine-hours. All
of the manufacturing overhead is fixed and is $1,144,800 per year. For simplicity, it is assumed
that this is the estimated manufacturing overhead for the year as well as the manufacturing
overhead at capacity and the actual amount of manufacturing overhead for the year. Job J42O,
which required 40 machine-hours, is one of the jobs worked on during the year.
Required:
a. Determine the predetermined overhead rate if the predetermined overhead rate is based on the
estimated amount of the allocation base.
b. Determine how much overhead would be applied to Job J42O if the predetermined overhead
rate is based on estimated amount of the allocation base.
c. Determine the underapplied or overapplied overhead for the year if the predetermined overhead
rate is based on the estimated amount of the allocation base.
d. Determine the predetermined overhead rate if the predetermined overhead rate is based on the
amount of the allocation base at capacity.
e. Determine how much overhead would be applied to Job J42O if the predetermined overhead
rate is based on the amount of the allocation base at capacity.
f. Determine the underapplied or overapplied overhead for the year if the predetermined overhead
rate is based on the amount of the allocation base at capacity.
7-141
154. The management of Niemeyer Corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity rather than on the estimated
amount of activity for the year. The company’s controller has provided an example to illustrate
how this new system would work. In this example, the allocation base is machine-hours and the
estimated amount of the allocation base for the upcoming year is 70,000 machine-hours. In
addition, capacity is 82,000 machine-hours and the actual activity for the year is 72,900 machine–
hours. All of the manufacturing overhead is fixed and is $4,132,800 per year. For simplicity, it is
assumed that this is the estimated manufacturing overhead for the year as well as the
manufacturing overhead at capacity and the actual amount of manufacturing overhead for the
year. Job O65A, which required 300 machine-hours, is one of the jobs worked on during the year.
Required:
a. Determine the predetermined overhead rate if the predetermined overhead rate is based on the
amount of the allocation base at capacity.
b. Determine how much overhead would be applied to Job O65A if the predetermined overhead
rate is based on the amount of the allocation base at capacity.
c. Determine the underapplied or overapplied overhead for the year if the predetermined overhead
rate is based on the amount of the allocation base at capacity.
7-142
155. The management of Trew Corporation would like to investigate the possibility of basing its
predetermined overhead rate on activity at capacity rather than on the estimated amount of
activity for the year. The company’s controller has provided an example to illustrate how this new
system would work. In this example, the allocation base is machine-hours and the estimated
amount of the allocation base for the upcoming year is 37,000 machine-hours. In addition,
capacity is 46,000 machine-hours and the actual activity for the year is 36,900 machine-hours. All
of the manufacturing overhead is fixed and is $697,820 per year. For simplicity, it is assumed that
this is the estimated manufacturing overhead for the year as well as the manufacturing overhead
at capacity and the actual amount of manufacturing overhead for the year.
Required:
a. Determine the underapplied or overapplied overhead for the year if the predetermined overhead
rate is based on the estimated amount of the allocation base.
b. Determine the underapplied or overapplied overhead for the year if the predetermined overhead
rate is based on the amount of the allocation base at capacity.