Answer:
Business A
Journal Entries:
Debit Accounts Payable $96,000
Credit 10% Notes Payable $96,000
To record the issuance of a 60-day, 10% note to a creditor on account.
Debit 10% Notes Payable $96,000
Debit Interest Expense $1,600
Credit Cash $97,600
To record the payment of the note at maturing, including interest.
Explanation:
a) Data and Analysis:
Accounts Payable $96,000
10% Notes Payable $96,000
10% Notes Payable $96,000
Interest Expense $1,600
Cash $97,600
a. Net income was $471,000.
b. Issued common stock for $74,000 cash.
c. Paid cash dividend of $11,000.
d. Paid $130,000 cash to settle a note payable at its $130,000 maturity value.
e. Paid $122,000 cash to acquire its treasury stock.
f. Purchased equipment for $91,000 cash.
Use the above information to determine cash flows from financing activities. (Amounts to be deducted should be indicated with a minus sign.)
Answer:
-$189,000
Explanation:
Calculation to determine the cash flows from financing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Issued common stock for cash $74,000
Less Paid cash dividend ($11,000)
Less Paid cash to settle a note payable ($130,000)
Less Paid cash to acquire its treasury stock ($122,000)
Cash flows from financing activities -$189,000
Therefore the Cash flows from financing activities is -$189,000
On July 1, a company sells 8-year $250,000 bonds with a stated interest rate of 6%. If interest payments are paid annually, each interest payment will be ________.
Answer:
The correct answer is "$15,000".
Explanation:
Given:
Value,
= $250,000
Interest rate,
= 6%
The Interest Payment will be:
[tex]Value\times Interest \ rate[/tex]
= [tex]250,000\times 6[/tex]%
= [tex]15,000[/tex] ($)
Molly sells bracelets to Jean's Place, a boutique store. Molly is scheduled to deliver 100 bracelets on July 1. On June 15, Jean, the owner of Jean's Place calls Molly and says "I might not be able to pay for your bracelets." Molly does not deliver the bracelets on July 1. Jean can probably recover from Molly for breach of contract. Group of answer choices True False
Answer: False
Explanation:
The contract is such that Molly agreed to bring bracelets if Jean would pay for said bracelets.
The terms of the contract therefore are that Jean would pay and Molly would deliver. Jean then calls Molly and says that they will be unable to pay which means that they are not going to be able to hold up their responsibilities in the contract.
Molly has the right to then cancel the contract because the other party will not be able to perform their obligations and face no repercussion for it.
Neubart Company owns 100% of the outstanding shares of two European subsidiaries, which operate largely independently and operate in a different industry than Neubart. The subsidiaries' earnings typically are reinvested in their home country. In consolidating the subsidiaries financial statements with those of the U.S. parent, the subsidiaries' financial statement numbers should be:________ a) remeasured using the current rate method. b) remeasured using the temporal method. c) translated using the current rate method. d) translated using the temporal method.
Answer: c) translated using the current rate method.
Explanation:
It should be noted that the translation method is utilized when the financial statements of a subsidiary unit are being expressed in the functional currency of the parent company.
Following the question given above, in consolidating the subsidiaries financial statements with those of the U.S. parent, the subsidiaries' financial statement numbers should be translated using the current rate method.
Therefore, the correct option is C.
epartments have estimated annual factory overhead costs of $256,000 and $480,000, respectively. The Fabrication Dept. expects 25,000 machine hours this year. The Assembly Dept. expects $592,000 DL cost this year. Calculate the factory overhead cost that will be charged to each unit of the two products using multiple production dept. factory overhead rates (round to nearest $0.00).
Answer:
Factory overhead cost charged to each unit:
Fabrication Assembly
Factory overhead rates $10.24 $0.81
Machine hours per unit 5
Direct labor cost per unit $118.40
Factory overhead cost per unit $51.20 $95.90
Explanation:
a) Data and Calculations:
Fabrication Assembly
Annual overhead costs $256,000 $480,000
Expected machine hours 25,000 0
Expected direct labor costs 0 $592,000
Overhead rates $10.24 $0.81
($256,000/25,000) ($480,000/$592,000)
Assuming number of units produced = 5,000
Each unit will consume 5 (25,000/5,000) $118.40 ($592,000/5,000)
machine hours direct labor cost
Overhead cost per unit = $51.20 $95.90
($10.24 * 5) ($118.40 * $0.81)
The F. Mercury, Capital account has a credit balance of $42,000 before closing entries are made. Total revenues for the period are $60,200, total expenses are $42,300, and withdrawals are $11,000. What is the correct closing entry for the expense accounts
Answer: Debit Income Summary $42,300; Credit Expense accounts $42,300
Explanation:
It should be noted that the expense accounts have a normal debit balance and therefore in such case will be closed by crediting of the accounts.
In such case, the income summary account will be debited, and the expenses account will then be credited.
Based on the information given, the correct closing entry for the expense accounts will be:
Debit Income Summary $42,300
Credit Expense accounts $42,300.
Based upon the following data for a business with a periodic inventory system, determine the cost of merchandise sold for August. Merchandise inventory, August 1 $ 96,610 Merchandise inventory, August 31 100,530 Purchases 254,660 Purchases returns and allowances 13,340 Purchases discounts 6,320 Freight in 4,070Cost of Merchandise Sold for August = ______.
Answer:
Cost of merchandise = $235150
Explanation:
Below is the calculations:
Cost of merchandise = Opening inventory - ending inventory + purchases - purchase return - purchase discount + freight
Now plug the value in the above formula:
Cost of merchandise = 96610 - 100530 + 254660 - 13340 - 6320 +4070
Cost of merchandise = $235150
Costs of $5,000 were incurred to acquire goods and make them ready for sale. The goods were shipped to the buyer (FOB shipping point) for a cost of $200. Additional necessary costs of $400 were incurred to acquire the goods. No other incentives or discounts were available. What is the buyer's total cost of merchandise inventory?a. $5,000.b. $5,200.c. $5,400. d. $5,600.
Answer:
d. $5,600
Explanation:
The computation of the total cost of merchandise inventory is shown below:
Cost of goods purchased $5,000
Add: Shipping charges (FOB point) $200
Additional necessary costs to purchase the goods $400
Buyer’s total cost of merchandise inventory $5,600
Hence, the total cost of merchandise inventory is $5,600
Therefore the option d is correct
A state of economic scarcity exists when consumers:
A. do not have enough resources to satisfy all of their wants.
B. save their money in banks instead of spending it.
C. borrow too much money to buy unnecessary products.
D. have their economic freedoms restricted by the government.
On June 15, Oakley Inc. sells inventory on account to Sunglass Hut (SH) for $4,500, terms 4/10, n/30. On June 20, SH returns to Oakley inventory that SH had purchased for $1,000. On June 24, SH completely fulfills its obligation to Oakley by making a cash payment. What is the amount of cash paid by SH to Oakley
Answer: $3360
Explanation:
Based on the information given in the question, the amount of cash paid by SH to Oakley will be calculated as thus:
SH will be entitled to a discount of 4% since the payment was made within the discount period, therefore, the discount that is applicable will be:
= $4500 - $1000
= $3,500
Therefore, the amount of cash payment that is made by SH to Oakley will be:
= $3,500 - (4% × $3,500)
= $3500 - (0.04 × $3500)
= $3500 - $140
= $3360
Therefore, the amount of cash paid by SH to Oakley is $3360.
Suppose that the owner of Boyer Construction is feeling the pinch of increased premiums associated with workersâ compensation and has decided to cut the wages of its two employees (Albert and Sid) from $25 per hour to $21 per hour. Assume that Albert and Sid view income and leisure as "goods," that both experience a diminishing rate of marginal substitution between income and leisure, and that the workers have the same before- and after-tax budget constraints at each wage. Albert and Sid's opportunity set is presented below:What is the value of A when the wage is $25?What is the value of A when the wage is $21?At the wage of $25 per hour, both Albert and Sid are observed to consume 14 hours of leisure (and equivalently supply 10 hours of labor). After wages were cut to $21, Albert consumes 12 hours of leisure and Sid consumes 16 hours of leisure. Determine the number of hours of labor each worker supplies at a wage of $21 per hour:Albert's supply of labor = _______Sid's supply of labor = ________How can you explain the seemingly contradictory result that the workers supply a different number of labor hours?A. Albert has no income effect, and Sid has no substitution effect when the wage declines to $21.B. Albert's substitution effect dominates his income effect when the wage declines to $21, and vice versa for Sid.C. Albert has no substitution effect, and Sid has no income effect when the wage declines to $21.D. Albert's income effect dominates his substitution effect when the wage declines to $21, and vice versa for Sid.
Suppose Siam Traders has the following results related to cash flows for 2020:
Net Income of $7,200,000
Increase in Accounts Payable of $600,000
Increase in Accounts Receivable of $100,000
Decrease in Debt of $700,000
Depreciation Expenses of $2,000,000
Dividends Paid of $500,000
Decrease in Inventory of $1,000,000
Purchases of Property, Plant, & Equipment of $8,300,000
Other Adjustments from Financing Activities of -$100,000
Other Adjustments from Investing Activities of $400,000
Other Adjustments from Operating Activities of -$200,000
Requried:
Create a statement of cash flows with amounts in thousands.
Answer:
Siam Traders
Siam Traders
Statement of Cash Flows (in thousands)
Operating Activities:
Net Income $7,200
Non-cash adjustment:
Depreciation Expenses $2,000
Increase in Accounts Receivable ($100)
Decrease in Inventory $1,000
Increase in Accounts Payable $600
Other Adjustments from Operating Activities ($200)
Net cash from operating activities $10,500
Investing Activities:
Purchases of Property, Plant, & Equipment ($8,300)
Other Adjustments from Investing Activities $400
Net cash from investing activities ($7,900)
Financing Activities:
Decrease in Debt ($700)
Dividends Paid ($500)
Other Adjustments from Financing Activities of ($100)
Net cash from financing activities ($1,300)
Net cash flows $1,300
Explanation:
a) Data and Calculations:
Net Income of $7,200,000
Increase in Accounts Payable of $600,000
Increase in Accounts Receivable of $100,000
Decrease in Debt of $700,000
Depreciation Expenses of $2,000,000
Dividends Paid of $500,000
Decrease in Inventory of $1,000,000
Purchases of Property, Plant, & Equipment of $8,300,000
Other Adjustments from Financing Activities of -$100,000
Other Adjustments from Investing Activities of $400,000
Other Adjustments from Operating Activities of -$200,000
Operating Activities:
Net Income of $7,200,000
Depreciation Expenses of $2,000,000
Increase in Accounts Receivable of $100,000
Decrease in Inventory of $1,000,000
Increase in Accounts Payable of $600,000
Other Adjustments from Operating Activities of -$200,000
Investing Activities:
Purchases of Property, Plant, & Equipment of $8,300,000
Other Adjustments from Investing Activities of $400,000
Financing Activities:
Decrease in Debt of $700,000
Dividends Paid of $500,000
Other Adjustments from Financing Activities of -$100,000
Your uncle repays a $150 loan from Tenth National Bank (TNB) by writing a $150 check from his TNB checking account. Assume these funds are the only loans and deposits available for your uncle and the bank.
Required:
Write the T-account table.
Answer: See explanation
Explanation:
The T-account for your uncle before the loan is repaid will be:
Your Uncle:
Assets: Bank accounts $150
Liabilities: Loan $150
Tenth National Bank
Assets: Loan and advance $150
Liabilities: Deposits $150
The T-account and TNB for your uncle after the loan is repaid will be:
Your Uncle
Assets: Bank account $0
Liabilities: Loan $0
Tenth National Bank
Assets: Loan and advance $0
Liabilities: Deposits $0
Consider an auctioneer who is selling an item through an auction. It is known that the 25 risk-neutral bidders have affiliated values that are distributed between $0 and $500 million. Based on this information, the auction type that will maximize expected revenue is:____.
1. English auction.
2. second-price, sealed-bid auction.
3. first-price, sealed-bid auction and Dutch auction.
4. English auction and second-price, seal-bid auction.
Answer:
2. second-price, sealed-bid auction.
Explanation:
In the given situation, it is mentioned that there is 25 risk -neutral bidders that contains the affiliated values and the same is to be allocated between $0 and $500 million
So, here the type of an action that could maximize the expected revenue is the second price i.e. sealed bid auction as in this the bidder provides the maximum price that received the good in the second maximum price
Therefore, the second option is correct
On the basis of the following data, determine the value of the inventory at the lower of cost or market. Apply lower of cost or market to each inventory item.
Product Inventory Quantity Cost per Unit Market Value per Unit (Net Realizable Value)
Model A 12 $106 $102
Model B 45 84 70
Model C 36 254 243
Model D 31 85 88
Model E 41 132 148
Required:
Determine the value of the inventory at the lower of cost or market.
Answer:
The value of the inventory at the lower of cost or market price is:
= $21,170.
Explanation:
a) Data and Calculations:
Product Inventory Cost per Unit Market Value per Unit LCNRV
Quantity (Net Realizable Value)
Model A 12 $106 $102 $1,225 (12*$102)
Model B 45 84 70 3,150 (45*$70)
Model C 36 254 243 8,748 (36*$243)
Model D 31 85 88 2,635 (31*$88)
Model E 41 132 148 5,412 (41*$132)
Total cost of inventory based on LCNRV (per item) $21,170
A truck that cost $72,000 and on which $60,000 of accumulated depreciation has been recorded was disposed of for $18,000 cash. The entry to record this event would include a
Answer:
Gain of $6,000.
Explanation:
Calculation to determine what The entry to record this event would include
Using this formula
Gain=(Accumulated depreciation+Cash)-Cost
Let plug in the formula
Gain=($60,000+$18,000)-$72,000
Gain=$78,000-$72,000
Gain=$6,000
Therefore The entry to record this event would include a gain of $6,000
Chabot Company had the following results last year: net operating income, $2,160; turnover, 5; and return on investment 18%. Chabot Company's average operating assets were: a. $300,000. b. $60,000. c. $10,800. d. $12,000.
A trial balance is a(n) (list/balance/chart)
of accounts and their balances at a point in time and is used to confirm that the sum of debit account balances equals the sum of
account balances. Use one word for each blank.
Answer:
- List; credit
"A trial balance is a(n) list of accounts and their balances at a point in time and is used to confirm that the sum of debit account balances equals the sum of credit account balances."
Explanation:
'Trial Balance' is described as the 'statement of the balances of all nominal accounts in a double-entry ledger.' It is primarily made with the aim to examine the equality in the debit, as well as, credit balances. As per the accounting rules, the total value of the debits must be equal to the total of credit values. Any difference or discrepancy in the balance signals that an error has been made in the calculation or making the entries and certain transactions are missed out. Thus, the correct words would be 'list and credit.'
What is probability and non probability sampling?
Explanation:
I hope this will help you.
Travis and Andrea were divorced in 2017. Their only marital property consisted of a personal residence (fair market value of $400,000, cost of $200,000), and publicly traded stocks (fair market value of $800,000, cost basis of $500,000). Under the terms of the divorce agreement, Andrea received the personal residence and Travis received the stocks. In addition, Andrea was to receive $50,000 for eight years. I. If the $50,000 annual payments are to be made to Andrea or her estate (if she dies before the end of the eight years), the payments will qualify as alimony. II. Andrea has a taxable gain from an exchange of her one-half interest in the stocks for Travis' one-half interest in the house and cash. III. If Travis sells the stocks for $900,000, he must recognize a $400,000 gain. a.I, II, and III are true. b.Only III is true. c.Only I and II are true. d.Only I and III are true.
Answer: B. b.Only III is true.
Explanation:
It should be noted that in order to qualify as an alimony, then the cash payments have to stop when the payer dies.
It should be noted that the $50,000 annual payments that are to be made to Andrea or her estate if she dies before the end of the eight years doesn't qualify as alimony.
Therefore, the correct option will be that If Travis sells the stocks for $900,000, he must recognize a $400,000 gain.
Therefore, only III is correct.
The Baldwin Company has just purchased $40,900,000 of plant and equipment that has an estimated useful life of 15 years. The expected salvage value at the end of 15 years is $4,090,000. What will the book value of this purchase (exclude all other plant and equipment) be after its third year of use
Answer:
$38,448,000
Explanation:
Calculation to determine What will the book value of this purchase
First step
Depreciation = (cost - salvage)/useful life
Depreciation= (40,900,000 - 4,090,000 )/15
Depreciation=36810000/15
Depreciation=2454000
Now let determine the
Book value=Cost -Depreciation
Book value=$40,900,000-$2,454,000
Book value=$38,448,000
Therefore the book value of this purchase is$38,448,000
The American Recovery and Reinvestment Act, signed by President Barack Obama in 2009, aimed at: Group of answer choices providing higher unemployment benefits to the residents of the economy. removing the supply bottlenecks in the economy. ensuring free trade flows across the world. stimulating the aggregate demand in the economy. closing an expansionary gap through a contractionary fiscal policy.
Answer: Stimulating the aggregate demand in the economy.
Explanation:
When former President Obama took over the governing of the nation in 2009, the country was in the midst of one of the worst global depressions that it had ever been through. Employment was high and aggregate demand was low.
President Obama therefore embarked on an expansionary fiscal policy by passing the American Recovery and Reinvestment Act which was to target certain sectors of the economy with the view of increasing investment in those sectors and consumption so that Aggregate demand can be stimulated in the economy as those two things are components of Aggregate demand.
who is the cm of korea
Kim boo-kyum is cm ko korea
Answer:
kim book kyum is the cm of korea
Explanation:
hope it helps!!
Trey Morgan is an employee who is paid monthly. For the month of January of the current year, he earned a total of $4,538. The FICA tax for social security is 6.2% of the first $128,400 earned each calendar year, and the FICA tax rate for Medicare is 1.45% of all earnings for both the employee and the employer. The amount of federal income tax withheld from his earnings was $680.70. His net pay for the month is:_________
A) $3,857.30
B) $3,510.14
C) $4,538.00
D) $3,162.98
E) $4,190.84
Answer: $3,510.14
Explanation:
Trey Morgan's net pay will be amount remaining after deducting the FICA taxes for Social security and Medicare and the Federal income tax withheld.
The net pay is therefore:
= 4,538 - (4,538 * 6.2%) - (4,538 * 1.45%) - 680.70
= 4,538 - 281.356 - 65.801 - 680.70
= $3,510.14
Denzel Brooks opened a Web consulting business called Venture Consultants and completes the following transactions in March.
March
1 Brooks invested $185,000 cash along with $26,000 in office equipment in the company
2 The company prepaid $8,000 cash for six months' rent for an office. Hint: Debit Prepaid Rent for $8,000.
3 The company made credit purchases of office equipment for $5,100 and office supplies for $2,000. Payment is due within 10 days.
6 The company completed services for a client and immediately received $5,500 cash.
9 The company completed a $8,500 project for a client, who must pay within 30 days.
12 The company paid $7,100 cash to settle the account payable created on March 3.
19 The company paid $6,200 cash for the premium on a 12-month insurance policy. Hint: Debit Prepaid Insurance for $6,200.
Required:
a. Prepare general journal entries to record these transactions.
b. Post the journal entries from part 1 to the ledger accounts.
c. Prepare a trial balance as of the end of March.
Answer:
Venture Consultants
1. Journal Entries:
March 1 Debit Cash $185,000
Debit Office equipment $26,000
Credit Common stock $211,000
March 2 Debit Prepaid Rent $8,000
Credit Cash $8,000
March 3 Debit Office equipment $5,100
Debit Office supplies $2,000
Credit Accounts payable $7,100
March 6 Debit Cash $5,500
Credit Service revenue $5,500
March 9 Debit Accounts receivable $8,500
Credit Service revenue $8,500
March 12 Debit Accounts payable $7,100
Credit Cash $7,100
March 19 Debit Prepaid Insurance $6,200
Credit Cash $6,200
b. T-accounts:
Cash
Date Account Titles Debit Credit
March 1 Common stock $185,000
March 2 Prepaid Rent $8,000
March 6 Service revenue 5,500
March 12 Accounts payable 7,100
March 19 Prepaid Insurance 6,200
March 31 Balance $169,200
Prepaid Rent
Date Account Titles Debit Credit
March 2 Cash $8,000
Prepaid Insurance
March 19 Cash $6,200
Office equipment
Date Account Titles Debit Credit
March 1 Common stock $26,000
March 3 Accounts payable 5,100
March 31 Balance $31,100
Office supplies
Date Account Titles Debit Credit
March 3 Accounts payable $2,000
Accounts receivable
Date Account Titles Debit Credit
March 9 Service revenue $8,500
Accounts payable
Date Account Titles Debit Credit
March 3 Office equipment $5,100
March 3 Office supplies $2,000
March 12 Cash $7,100
Common stock
Date Account Titles Debit Credit
March 1 Cash $185,000
March 1 Office equipment 26,000
March 31 Balance $211,000
Service revenue
Date Account Titles Debit Credit
March 6 Cash $5,500
March 9 Accounts receivable 8,500
March 31 Balance $14,000
c. Trial Balance as of March 31
Date Account Titles Debit Credit
Cash $169,200
Prepaid rent 8,000
Prepaid insurance 6,200
Accounts receivable 8,500
Office equipment 31,100
Office supplies 2,000
Common stock $211,000
Service Revenue 14,000
Totals $225,000 $225,000
Explanation:
a) Data and Analysis:
March 1 Cash $185,000 Office equipment $26,000 Common stock $211,000
March 2 Prepaid Rent $8,000 Cash $8,000
March 3 Office equipment $5,100 Office supplies $2,000 Accounts payable $7,100
March 6 Cash $5,500 Service revenue $5,500
March 9 Accounts receivable $8,500 Service revenue $8,500
March 12 Accounts payable $7,100 Cash $7,100
March 19 Prepaid Insurance $6,200 Cash $6,200
Item 2 On July 1 of the current calendar year, Plum Co. paid $8,000 cash for management services to be performed over a two-year period beginning July 1. Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry on December 31 of the current year for Plum would include:
Answer:
- July 1st - December 31st (6 months)
- Here, $8,000 is paid for 2 years (24 months)
So, expenses for 6 month = $8,000 * 6/24 = $2,000
Date Journal Entry Debit Credit
Expense $2,000
Prepaid expense $2,000
(To record the expense)
Andrews Company currently has the following balances in their liability and equity accounts: Total Liabilities: $52,319,000 Common Stock: $8,808,000 Retained Earnings: $45,066,000 Next year the Andrews Company generates $11,500,000 in Net Profit, pays $5,000,000 in dividends, and total liabilities and common stock remain unchanged. What will their total assets be next year
Answer: $112,693,000
Explanation:
Total assets = Equity + Liabilities
Liabilities will not change in the new year.
Retained earnings = Beginning retained earnings + Net income - Dividends
= 45,066,000 + 11,500,000 - 5,000,000
= $51,566,000
Assets = (8,808,000 + 51,566,000) + 52,319,000
= $112,693,000
Note: Equity is the sum of common stock and retained earnings
Prior to June 30, a company has never had any treasury stock transactions. A company repurchased 100 shares of its $1 par common stock on June 30 for $40 per share. On July 20, it reissued 50 of these shares at $46 per share. On August 1, it reissued 20 of the shares at $38 per share. What is the journal entry necessary to record the repurchase of stock on June 30?A. Debit Common Stock $2,300; credit Cash $2,300.
B. Debit Common Stock $20; debit Treasury Stock $2,290; credit Cash $2,300.
C. Debit Common Stock $2,300; credit Treasury Stock $2,000; credit Paid-In Capital, Treasury Stock $300.
D. Debit Cash $2,300; credit Paid-in Capital, Treasury Stock $300; credit Treasury Stock $2,000.
E. Debit Cash $2,300; credit Treasury Stock $2,300.
Answer:
When shares are repurchased, they are recorded at the cost price in the books which means that they will be recorded at:
= 100 * 40
= $4,000
Cash will then be credited because assets are credited when they reduce.
Treasury stock will be debited to show that Equity is reducing.
Date Account Title Debit Credit
June, 30 Treasury Stock $4,000
Cash $4,000
Which ratio measures the number of dollars of operating cash available to meet each dollar of interest and other fixed charges that the firm owes?
Answer:
Fixed-charge coverage ratio
Explanation:
The fixed-charge coverage ratio can be regarded as a rato that gives the measurements of the ability of a firm have to cover all her fixed charges. These fixed charges could be expense as well as debt payments and interest. It displays the wellness that earnings of a company has to cover its fixed expenses. This ratio is considered by bank before they lend money to a business. It should be noted that Fixed-charge coverage ratio measures the number of dollars of operating cash available to meet each dollar of interest and other fixed charges that the firm owes.
Given the following data, compute overhead applied and the under- or overapplication of overhead for the period:
Estimated annual overhead cost $1700000
Actual annual overhead cost $1675000
Estimated machine hours 200000
Actual machine hours 190000
Answer:
Underapplied overhead= $60,000
Explanation:
Giving the following information:
Estimated annual overhead cost $1700000
Actual annual overhead cost $1675000
Estimated machine hours 200000
Actual machine hours 190000
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 1,700,000 / 200,000
Predetermined manufacturing overhead rate= $8.5 per machine hour
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 8.5*190,000
Allocated MOH= $1,615,000
Finally, the over/under allocation:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 1,675,000 - 1,615,000
Underapplied overhead= $60,000
