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A company uses an integrated accounting system and absorbs production overhead using a predetermined rate of $6 per machine hour.
Last period a total of 25,500 machine hours were worked and the actual production overhead incurred was $158,000.
The accounting entries for the absorption of production overhead for the period would be:
Suggested Answer: C
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34 comments · newest first
DO
Domitila
11 months ago
Not sure about this, seems like a mistake in the numbers.
SO
Sophia
11 months ago
Definitely not option C, that's backwards!
FA
Fairy
11 months ago
Wait, how did they incur $158,000 with 25,500 hours?
RO
Rodolfo
12 months ago
I think it should be option A, that makes the most sense.
AI
Aileen
12 months ago
The predetermined rate is $6 per machine hour.
PR
Precious
1 year ago
I vaguely remember that the total overhead absorbed should match the actual incurred, so maybe it's option A? But I’m not completely confident.
CA
Cammy
1 year ago
I feel like the predetermined rate of $6 per machine hour should guide us, but I'm confused about how that ties into the actual overhead incurred.
ME
Meaghan
1 year ago
I think we did a similar practice question where we had to debit and credit the accounts, but I can't recall if it was the production overhead or work in progress that got debited.
IL
Iluminada
1 year ago
I remember we discussed how to calculate the absorbed overhead based on machine hours, but I'm not sure if it's $158,000 or something else.
AN
Antonio
1 year ago
I've got this! The key is to recognize that the actual overhead incurred was $158,000, but the absorbed overhead based on the predetermined rate was only $153,000. So the accounting entries would be a debit to the production overhead control account for $158,000 and a credit to the work in progress control account for $158,000.
AN
Anisha
1 year ago
Okay, let me think this through step-by-step. The predetermined overhead rate is $6 per machine hour, and 25,500 machine hours were worked. So the absorbed overhead would be 25,500 * $6 = $153,000. Then I need to compare that to the actual overhead of $158,000 and determine the correct accounting entries.
DI
Diane
1 year ago
Hmm, I'm a bit confused. Do I need to calculate the absorbed overhead or just determine the correct accounting entries? I want to make sure I understand the question fully before attempting to answer.
BA
Barrett
1 year ago
This looks straightforward. I just need to calculate the absorbed overhead based on the predetermined rate and the actual machine hours, then compare that to the actual overhead incurred.
CL
Clorinda
1 year ago
Hmm, I'm not sure about this one. I'll need to think it through step-by-step to make sure I understand the best way to solve this.
WI
Wilford
1 year ago
I'd eliminate A and B quickly - those don't sound like something a regulatory body would mandate. Narrowing down to C or D.
NI
Niesha
1 year ago
Option D all the way! Gotta love those predetermined overhead rates, they make the accounting so much simpler. Now, where's the snack bar in this place?
SY
Sylvia
1 year ago
Hold up, is this a trick question? I feel like I'm missing something here. Better read it over one more time to make sure I don't mess this up.
LU
Lucia
1 year ago
Haha, looks like someone forgot to double-check the math! That's why I always have a calculator on hand for these exams.
JO
Joanna
1 year ago
C) Debit: work in progress control account $158,000 Credit: production overhead control account $158,000
IR
Irma
1 year ago
B) Debit: production overhead control account $153,000 Credit: work in progress control account $153,000
GL
Glory
1 year ago
C) Debit: work in progress control account $158,000 Credit: production overhead control account $158,000
KA
Katina
1 year ago
B) Debit: production overhead control account $153,000 Credit: work in progress control account $153,000
LI
Linn
1 year ago
A) Debit: production overhead control account $158,000 Credit: work in progress control account $158,000
EL
Eladia
1 year ago
A) Debit: production overhead control account $158,000 Credit: work in progress control account $158,000
SE
Sena
1 year ago
I'm a bit confused. Shouldn't the actual production overhead of $158,000 be the amount recorded in the books? Option A seems more logical to me.
JU
Justine
1 year ago
It's important to accurately record the production overhead to ensure the financial statements reflect the true costs of production.
CE
Celeste
1 year ago
Yes, that's right. Debit the production overhead control account and credit the work in progress control account.
TA
Tamesha
1 year ago
Option A is correct. The actual production overhead of $158,000 should be recorded in the books.
JA
Jacqueline
2 years ago
But the actual production overhead incurred was $158,000, so it should be debited to production overhead control account.
PA
Pauline
2 years ago
Option D seems to be the correct answer. The predetermined rate is $6 per machine hour, and with 25,500 machine hours worked, the total absorption should be $153,000, which matches the entry in option D.
JE
Jerrod
1 year ago
Yes, the total absorption should be $153,000 with 25,500 machine hours worked.
AL
Aleshia
1 year ago
I agree, option D is the correct answer.
KA
Kanisha
2 years ago
I disagree, I believe the answer is B.
JA
Jacqueline
2 years ago
I think the answer is A.