Exercise 13;LO.1 (Predetermined OH rate) for 2008, Southwest Industrial has a monthly overhead cost formula of $42,900 + $6 per direct labor hour. The firm?s 2008 expected annual capacity is 4156,000 direct labor hours, to be incurred evenly each month. Making one unit of the company?s product requires three direct labor hours.;a. Determine the total overhead to be applied per unit of product in 2008.;b. Prepare journal entries to record the application of overhead to Work in Progress Inventory and the incurrence of $128,550 of actual overhead in January 2008, when $12,780 direct labor hours were worked.;c. Given the actual direct labor hours in part (b), how many units would you have expected to be produced in January?;EXERCISE 14;LO.1 (Predetermined OH rate) Cairo Products applies overhead using a combined rate for fixed and variable overhead. The rate is 125 percent of direct labor cost. During the first three months of the current year, actual cost were incurred as follows;Direct Labor Cost Actual Overhead;January $360,000 $440,000;February 330,000 420,400;March 340,000 421,000;a. What amount of overhead was applied to production in each of the three months?;b. What was the under-applied or over-applied overhead for each of the three months and for the first quarter?;EXERCISE 16;LO.2 (Under-applied or over-applied overhead) At the end of 2008, Westmeier Corporation?s accounts showed a $33,000 credit balance in Manufacturing Overhead Control. In addition, the company had the following account balances;Work in Progress Inventory $192,000;Finished Goods Inventory 48,000;Cost of Goods Sold 360,000;a. Prepare the necessary journal entry to close the overhead account of the balance is considered immaterial.;b. Prepare the necessary journal entry to close the overhead account of the balance is considered material.;c. Which method do you believe is more appropriate for the company and why.
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