80.2K

Verified Solution

Link Copied!

Utease Corporation has several production plants nationwide. A newly opened plant in Dubuque produces and sells one product. The plant is treated, for responsibility accounting purposes, as a profit center. The unit standard costs for a production unit, with overhead applied based on direct labor hours, are as follows.

Manufacturing costs $($per unit based on expected activity of $13,000$ units or $19,500$ direct labor hours$)$:

Direct materials $(2\mathrm{.}2$ pounds at $$20)$ $ $44\mathrm{.}00$

Direct labor $(1\mathrm{.}5$ hours at $$62)93\mathrm{.}00$

Variable overhead $(1\mathrm{.}5$ hours at $$20)30\mathrm{.}00$

Fixed overhead $(1\mathrm{.}5$ hours at $$30)45\mathrm{.}00$

Standard cost per unit $ $212\mathrm{.}00$

Budgeted selling and administrative costs:

Variable $ $5$ per unit

Fixed $ $1,000,000$

Expected sales activity: $9,000$ units at $$400$ per unit

Desired ending inventories: $10\%$ of sales

Assume this is the first year of operations for the Dubuque plant. During the year, the company had the following activity.

Units produced $12,000$

Units sold $10,500$

Unit selling price $ $395$

Direct labor hours worked $17,500$

Direct labor costs $ $1,102,500$

Direct materials purchased $30,400$ pounds

Direct materials costs $ $608,000$

Direct materials used $30,400$ pounds

Actual fixed overhead $ $280,000$

Actual variable overhead $ $290,000$

Actual selling and administrative costs $ $1,345,000$

In addition, all over$-$ or underapplied overhead and all product cost variances are adjusted to cost of goods sold.

Comprehensive Problem $6($Algo$)$ Part e

e$-1.$ Find the total over$-$ or underapplied $($both fixed and variable$)$ overhead.

e$-2.$ Would cost of goods sold be a larger or smaller expense item after the adjustment for over$-$ or underapplied overhead?

Answer & Explanation Solved by verified expert

See Answer