タグ:Under- or overapplied overhead ( 1 ) タグの人気記事

Don't look down upon me, Willey!

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Job-Order Costing
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From Willey 2005, Module 44 (COST MEASUREMENT)
Q13: Under Pick CO.'s job order costing system, manufacturing overhead is applied to work in process using a predetermined annual overhead rate. During Jan. 2003, Pick’s transactions included the following:

Direct materials issued to production        $90,000
Indirect materials issued to production        8,000
Manufacturing overhead incurred           125,000
Manufacturing overhead applied           113,000
Direct labor costs                       107,000

(Click the "ANSWER" below for the explanation given by Willey.)
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I thought in the following way…

1: OH is underapplied, so an adjustment should be made.

2: If the gap is material, the difference should be allocated to WIP, CGS, and EI. And if the gap doesn’t considered material, then all the difference is to be assigned to CGS.

3: How about this case? Is there any clue that indicates how significant the difference is….?

But I couldn’t figure it out, and read the explanation of Willey, which says,

“Under- or overapplied overhead is not usually considered on a monthly basis. Therefore, the cost of jobs completed should include allocated overhead only.”



I felt as if the Willey book had been laughing at my mistake, looking down upon me!

Mmmmmmmmmmm!

I’ll never let that happen again, Willey!!

ANSWERS
[PR]
by nn_77 | 2005-12-25 21:59 | >BEC | Comments(0)