Reference no: EM133012078
Questions -
Q1. The following cost data relate to the manufacturing activities of the Kookabuka Company during the most recent year:
The company uses a predetermined overhead rate to charge the overhead cost to production. The rate for the year just completed was $4.00 per machine hour; a total of 6,000 machine hours were recorded for the year.
Required -
a. Compute the amount of under-or overapplied overhead cost for the year just ended.
b. Prepare a schedule of the cost of goods manufactured for the year.
Q2. McKenna Collins LLP public accounting firm employs 10 full-time professionals who provide services to clients. All professional labour compensation is traced directly to clients on a per professional labour-hour basis. Any other costs are included in a single indirect-cost pool (same as overhead) and allocated to individual clients according to billable professional labour hours.
Operating costs and data for the year included the following:
Required -
a. By how much, if any, was the overhead cost underapplied or overapplied?
b. Prepare the summary journal entry to close any underapplied or overapplied overhead cost to a Cost of Services Provided account.
c. Explain qualitatively quantitatively (in as much detail as possible) the source(s) of any underapplied or overapplied overhead cost.
Q3. Sicily Company reported the following actual cost data for the year:
Sicily Company used a 150% predetermined overhead rate based on direct labour cost. The rate was based on annual estimated overhead cost and direct labour cost of $252,000 and $168,000, respectively.
Required -
a. Calculate the cost of goods manufactured.
b. What was the cost of goods sold before adjusting for any under or overapplied overhead?
c. By how much was manufacturing overhead cost under or overapplied?
d. Prepare the summary journal entry to close any under or overapplied manufacturing overhead cost to cost of goods sold.
e. Analyze the under or overapplied manufacturing overhead costs calculated in part c above into two separate components: amount due to incorrect estimate of the annual manufacturing overhead costs and an amount due to incorrect estimate of the annual direct labour cost.