Reference no: EM132839709

Question - X Company reported the following actual cost data for the year:

Purchase of raw materials (all direct) $300,000

Direct labour cost 200,000

Manufacturing overhead costs 269,000

Change in inventories: Decrease in raw materials $12,000

Decrease in work in process 10,000

Decrease in finished goods 20,000

X 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. Make summary journal entry to close any under or overapplied manufacturing overhead cost to cost of goods sold. Is such an entry appropriate in this situation? Why or why not?

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.