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Dinkel Manufacturing Corporation accumulatesthe following data relative to jobs started and finished during themonth of June 2008.
Costs and Production Data
Actual
Standard
Overhead is applied on the basis of standard machine hours. Three hours of machine time are required for each direct laborhour. The jobs were sold for $400,000. Selling and administrative expenses were $40,000. Assume that the amount of raw materials purchased equaled the amount used.
Compute all of the variances for (1) directmaterials and (2) direct labor.
Compute the total overhead variance.
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Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense. Show the year-end balance sheet presentation for accounts receivable.
What are the different ways to estimate bad debt? How does this affect net income? What does Generally Accepted Accounting Principles (GAAP) require? Why? Should all companies have bad debt? Explain your answer.
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