Account balances are as follows:
Manufacturing overhead $240,000 underapplied
Work in process 100,000
Finished goods 300,000
Cost of goods sold 800,000
If underapplied or overapplied overhead is material and is allocated to Work in Process, Finished Goods, and Cost of Goods Sold (based on ending account balances), Cost of Goods Sold after adjustment would have a balance of
Erickson Company made the following predictions for 2009:
Factory overhead costs $300,000
Direct labor hours 50,000 hours
Machine hours 100,000 hours
Job A2 (which was started and completed in May) used 3,000 direct labor hours, 2,000 machine hours, and $57,000 of prime costs.
Refer to Figure 4-2. If factory overhead is applied based on machine hours, the cost of Job A2 for the Erickson Company is
This solution helps go through the effects of changing underapplied or overapplied overhead costs.