The balance in the manufacturing overhead account on January 31
Applied manufacturing overhead cost= 60% of the direct labor cost= 60% × $300,000= $180,000 (Credit)
Actual manufacturing overhead cost= $170,000 (Debit)
Balance in the manufacturing overhead account on January 31= $10,000 (Credit)
Problem 3-42
Twisto Pretzel Company
Schedule of cost of Goods Manufactured
For the year of 20×1
| Particulars | Amount $ | Amount $ |
| Direct Materials: | ||
| Raw material inventory on 31.12. ×0 | 10,100 | |
| Add: Purchase of raw material | 39,000 | |
| Raw material available for use | 49,100 | |
| Deduct: Raw material inventory 31.12. ×1 | 11,000 | |
| Raw material used | 38,100 | |
| Direct labour | 79,000 | |
| Manufacturing overhead: | ||
| Insurance on factory and equipment | 3,600 | |
| Indirect material used | 4,900 | |
| Depreciation on factory equipment | 2,100 | |
| Property taxes of factory | 2,400 | |
| Utilities for factory | 6,000 | |
| Indirect labor | 29,000 | |
| Depreciation on factory building | 3,800 | |
| Rental for warehouse to store raw material | 3,100 | |
| Total actual manufacturing overhead | 54,900 | |
| Add: over applied overhead | 3,100 | |
| Overheads applied to work in process | 58,000 | |
| Total manufacturing | 175,000 | |
| Add: Work in process inventory on 31.12. ×0 | 8,100 | |
| Subtotal | 183,200 | |
| Deduct: work in process inventory on 31.12. ×1 | 8,300 | |
| Cost of goods manufactured | 174,900 |
Twisto Pretzel Company
Schedule of cost of goods sold
For the year 20×1
| Particulars | Amounts $ |
| Finished goods inventory on 31.12. ×0 | 14,000 |
| Add: cost of goods manufactured | 174,000 |
| Costs of goods available for sale | 188,900 |
| Deduct: finished goods inventory on 31.12. ×1 | 15,400 |
| Cost of goods sold | 173,500 |
| Deduct: Over applied manufacturing overhead | 3,100 |
| Cost of goods sold(adjust for overapplied overhead) | 170,400
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