Applied vs. Actual Manufacturing Overhead
Davis Manufacturing Corporation applies manufacturing overhead on the basis of 15096 of direct labor cost. An analysis of the related accounts and job order cost sheet indicates that during Me year total manufacturing overhead incurred was 8157,500 and that at yearend Work in Process Inventory, Finished Goods Inventory, and Cost of Goods Sold included $20,000, $10,000, and $70,000, respectively, of direct labor incurred during the current Year.
a. Determine the under applied manufacturing overhead at year end (assume it is significant).
b. Prepare a journal entry to record the disposition of Me underapplied manufacturing overhead