Question -
Part A - Drake Company manufactures quality gentlemen's clothing. The following selected financial information for the fiscal year 2017 is provided:
Item Amount
Sales $100,000
Cost of Goods Manufactured 75,000
Direct Material Purchased 30,000
Factory Overhead 10,000
Work in Process - January 1 30,000
Work in Process - December 31 15,000
Direct Material - December 31 10,000
Finished Goods Inventory - December 31 60,000
Net Income 15,000
Direct Materials used 30,000
Cost of Goods Sold 55,000
Use this information to prepared a detailed Schedule of Costs of Goods Manufactured for FY 2017.
Part B - During March 2017, Kendrick Corporation recorded $17,000 of costs related to factory overhead. Kendrick's overhead application rate is based on direct labor hours. The preset formula for overhead application estimated that $18,000 would be incurred, and 10,000 direct labor hours would be worked. During March, 10,200 hours were actually worked. Use this information to determine (round & enter any final dollar answers to the nearest whole dollar):
1. The amount of factory overhead that was applied in March.
2. The amount of factory overhead that was over or under applies.
3. Was the factory overhead was over applied or under applied.