Problem 1:
Avery Co. uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. For the month of October, Avery's estimated manufacturing overhead cost was $279,000 based on an estimated activity level of 93,000 direct labor-hours. Actual overhead amounted to $310,000 with actual direct labor-hours totaling 106,000 for the month. How much was the overapplied or underapplied overhead?
- $8,000 overapplied
- $12,000 underapplied
- $12,000 overapplied
- $8,000 underapplied
Problem 2:
On November 1, Arvelo Corporation had $33,000 of raw materials on hand. During the month, the company purchased an additional $82,000 of raw materials. During November, $55,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $4,100.
Prepare journal entries to record these events. Use those journal entries to answer the following questions:
The credits to the Manufacturing Overhead account as a consequence of the raw materials transactions in November total:
- $55,000
- $4,100
- $52,000
- $0