16 using the following accounts and an overhead rate of 150

16 using the following accounts and an overhead rate of 150% of direct labor cost, compute the amount of applied overhead Work in Process Inventory DR Finished Goods Inventory CR DR CR 01.28 58 eg. Bal. D.M O.L 36,20 eg Bal 6,000 57,300 223.300 H. G. 223,300 d. Bal 26,200 Multiple Choice $85,950. $93,500 $93.600 $62,400 $156,000

Solution

$ 1 Transfer to Finished Goods Inventory                        223,300 Add: Ending Balance of Work in Process                          26,200 Less; Beginning balance of Work in Process                        (36,200) D.M                        (57,300) D.L + O.H                        156,000 O.H = 150% of D.L , D.L + O.H = 250% of D.L = $ 156,000 D.L    ( $ 156,000/250) x 100                          62,400 Applied Overhead = ( $ 62,400 x 150% )                          93,600 2 Applied overhead                            6,400 Direct Labor cost                          34,000 Overhead rate = ($ 6,400 / $ 34,000) x 100 18.82% 3 Direct Material cost                          90,000 Overhead application rate 155% Amount of Overhead cost ( $ 60,000 x 155% )                        139,500 4 Applied overhead cost is more than the actual overhead cost, then such situation is called overhead over-applied. In case of over-applied, such excess cost can be reduced and credited to Cost of goods sold account. A credit to Cost of Goods Sold for $856