Aspen Company estimates its manufacturing overhead to be $625,000 and its direct labor costs to be...

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Accounting

Aspen Company estimates its manufacturing overhead tobe $625,000 and its direct labor costs to be $500,000 for year 2.Aspen worked on three jobs for the year. Job 2-1, which was soldduring year 2, had actual direct labor costs of $195,000. Job 2-2,which was completed, but not sold at the end of the year, hadactual direct labor costs of $325,000. Job 2-3, which is still inwork-in-process inventory, had actual direct labor costs of$130,000. Actual manufacturing overhead for year 2 was $799,900.Manufacturing overhead is applied on the basis of direct laborcosts.

Required:

Prepare an entry to allocate over- or underappliedoverhead to Work in Process, Finished Goods and Cost of GoodsSold. (If no entry is required for a transaction/event,select "No journal entry required" in the first accountfield.)

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4.2 Ratings (713 Votes)

Estimated Manufacturing overhead 625000 Labor Cost 500000 Pre Determined overhead rate Manufacturing overhead rate100labor cost 625000500000 125 of Labor cost Direct labor cost on Job 11 195000 Direct labor cost on Job 12 325000 Direct labor cost on Job 13 130000 Overhead applied on Job 11 195000125 243750 Overhead applied on Job 12 325000125 406250 Overhead applied on See Answer

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Aspen Company estimates its manufacturing overhead to be $625,000 and its direct labor costs to be...

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Accounting

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