会计220 1
Consider the t-accounts below for Sharp Corp. Format your answers as they appear in the t-account (i.e. whole numbers and no dollar sign). What is the amount of direct materials? What is the costs of goods manufactured? What is the total manufacturing cost that would have been reported on the company's job cost sheets during the year? What it the total actual manufacturing overhead costs incurred during the year? If manufacturing overhead is closed to cost of goods sold, what would be the adjusted cost of goods sold reported on the income statement?
1.$132,000 2.$510,000 3.$512,000 4.$204,000 5.$454,000
The journal entry to record applying overhead during the production process is:
Work In Process XXX Manufacturing Overhead XXX
Differential costs can
be either fixed or variable.
Dukes Corporation used a predetermined overhead rate this year of $2 per direct labor-hour, based on an estimate of 20,000 direct labor-hours to be worked during the year. Actual costs and activity during the year were: Actual manufacturing overhead cost incurred$38,000Actual direct labor-hours worked 18,500 The overapplied or underapplied manufacturing for the year was:
$1,000 underapplied Overhead over or underapplied Actual manufacturing overhead incurred$38,000 Manufacturing overhead applied to Work in Process: Predetermined overhead rate (a)$2per direct labor-hourActual total amount of the allocation base (b) 18,500direct labor-hoursManufacturing overhead applied (a) × (b)$37,000 Underapplied (overapplied) manufacturing overhead$1,000
Boward Corporation has two production departments, Milling and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Milling Department's predetermined overhead rate is based on machine-hours and the Assembly Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: MillingAssemblyMachine-hours 18,000 12,000Direct labor-hours 2,000 7,000Total fixed manufacturing overhead cost$120,600$76,300Variable manufacturing overhead per machine-hour$2.00 Variable manufacturing overhead per direct labor-hour $4.30 During the current month the company started and finished Job T818. The following data were recorded for this job: Job T818:Milling AssemblyMachine-hours50 30Direct labor-hours10 40 The total amount of overhead applied in both departments to Job T818 is closest to: (Round your intermediate calculations to 2 decimal places.)
$1,043 Milling Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department)= $120,600 + ($2.00 per machine-hour × 18,000 machine-hours)= $120,600 + $36,000 = $156,600Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base incurred = $156,600 ÷ 18,000 machine-hours = $8.70 per machine-hourOverhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $8.70 per machine-hour × 50 machine-hours = $435Assembly Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct labor-hour × Total direct labor-hours in the department)= $76,300 + ($4.30 per direct labor-hour × 7,000 direct labor-hours)= $76,300 + $30,100 = $106,400Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base incurred = $106,400 ÷ 7,000 direct labor-hours = $15.20 per direct labor-hourOverhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $15.20 per direct labor-hour × 40 direct labor-hours = $608Overhead applied to Job T818 Milling Department$435Assembly Department 608Total$1,043
Juanita Corporation uses a job-order costing system and applies overhead on the basis of direct labor cost. At the end of October, Juanita had one job still in process. The job cost sheet for this job contained the following information: Direct materials$480Direct labor$150Manufacturing overhead applied$600 An additional $100 of labor was needed in November to complete this job. For this job, how much should Juanita have transferred to finished goods inventory in November when it was completed?
$1,730 Overhead applied = Predetermined overhead rate × Amount of the allocation base incurred $600 = Predetermined overhead rate × $150Predetermined overhead rate = $600 ÷ $150 = 4.0 Direct materials$480Direct labor ($150 + $100) 250Manufacturing overhead applied (4.0 × $250) 1,000Total product cost$1,730
Wessner Corporation has provided the following information: Cost per UnitCost per PeriodDirect materials$6.20 Direct labor$2.80 Variable manufacturing overhead$1.45 Fixed manufacturing overhead $12,000 Sales commissions$1.00 Variable administrative expense$0.55 Fixed selling and administrative expense $4,000 The incremental manufacturing cost that the company will incur if it increases production from 4,000 to 4,001 units is closest to:
$10.45 Direct materials$6.20Direct labor 2.80Variable manufacturing overhead 1.45Incremental manufacturing cost$10.45
Deloria Corporation has two production departments, Forming and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department's predetermined overhead rate is based on machine-hours and the Assembly Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: FormingAssemblyMachine-hours 19,000 15,000Direct labor-hours 4,000 8,000Total fixed manufacturing overhead cost$129,200$77,600Variable manufacturing overhead per machine-hour$1.60 Variable manufacturing overhead per direct labor-hour $3.00 During the current month the company started and finished Job T288. The following data were recorded for this job: Job T288:FormingAssemblyMachine-hours 80 10Direct labor-hours 30 40Direct materials$730$380Direct labor cost$900$1,200 The predetermined overhead rate for the Assembly Department is closest to:
$12.70 per direct labor-hour Assembly Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct labor-hour × Total direct labor-hours in the department)= $77,600 + ($3.00 per direct labor-hour × 8,000 direct labor-hours)= $77,600 + $24,000 = $101,600Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base incurred = $101,600 ÷ 8,000 direct labor-hours = $12.70 per direct labor-hour
Brault Corporation has provided the following information: Cost per UnitCost per PeriodDirect materials$6.85 Direct labor$3.85 Variable manufacturing overhead$1.25 Fixed manufacturing overhead $97,200 Sales commissions$1.00 Variable administrative expense$0.55 Fixed selling and administrative expense $40,500 If 10,000 units are sold, the variable cost per unit sold is closest to:
$13.50 Direct materials$6.85Direct labor 3.85Variable manufacturing overhead 1.25Sales commissions 1.00Variable administrative expense 0.55Variable cost per unit sold$13.50
Thach Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $665,000, variable manufacturing overhead of $3.00 per machine-hour, and 70,000 machine-hours. Recently, Job T321 was completed with the following characteristics: Number of units in the job 30Total machine-hours 90Direct materials$630Direct labor cost$2,880 The unit product cost for Job T321 is closest to:
$154.50 Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $665,000 + ($3.00 per machine-hour × 70,000 machine-hours) = $665,000 + $210,000 = $875,000Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $875,000 ÷ 70,000 machine-hours = $12.50 per machine-hourOverhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $12.50 per machine-hour × 90 machine-hours = $1,125 Direct materials$630Direct labor 2,880Manufacturing overhead applied 1,125Total cost of Job T321$4,635 Total cost of Job T321 (a)$4,635Number of units (b) 30Unit product cost (a) ÷ (b)$154.50
Boersma Sales, Inc., a merchandising company, reported sales of 7,100 units in September at a selling price of $682 per unit. Cost of goods sold, which is a variable cost, was $317 per unit. Variable selling expenses were $44 per unit and variable administrative expenses were $22 per unit. The total fixed selling expenses were $157,200 and the total administrative expenses were $338,000.The gross margin for September was:
$2,591,500 Sales (7,100 units × $682 per unit)$4,842,200Cost of goods sold (7,100 units × $317 per unit) 2,250,700Gross margin$2,591,500
Beans Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $162,000, variable manufacturing overhead of $2.80 per direct labor-hour, and 60,000 direct labor-hours. Recently, Job K818 was completed with the following characteristics: Number of units in the job10Total direct labor-hours50Direct materials$920Direct labor cost$1,400 The total job cost for Job K818 is closest to: (Round your intermediate calculations to 2 decimal places.)
$2,595 Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $162,000 + ($2.80 per direct labor-hour × 60,000 direct labor-hours) = $162,000 + $168,000 = $330,000Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $330,000 ÷ 60,000 direct labor-hours = $5.50 per direct labor-hourOverhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $5.50 per direct labor-hour × 50 direct labor-hours = $275 Direct materials$920Direct labor 1,400Manufacturing overhead applied 275Total cost of Job K818$2,595
Calfee Corporation is a manufacturer that uses job-order costing. The company has supplied the following data for the just completed year: Beginning inventories: Raw materials$40,000 Work in process$19,000 Estimated total manufacturing overhead at the beginning of the year$595,000 Estimated direct labor-hours at the beginning of the year 35,000direct labor-hours Results of operations: Raw materials purchased on account$423,000 Raw materials (all direct) requisitioned for use in production$420,000 Direct labor cost$641,000 Actual direct labor-hours 33,000direct labor-hoursManufacturing overhead: Indirect labor cost$143,000 Other manufacturing overhead costs incurred$531,000 Cost of goods manufactured$1,441,000 The ending balance in the Work in Process inventory account is:
$200,000 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base= $595,000 ÷ 35,000 direct labor-hours = $17.00 per direct labor-hourOverhead applied = Predetermined overhead rate × Amount of the allocation base incurred= $17.00 per direct labor-hour × 33,000 direct labor-hours = $561,000 Work In ProcessBalance, beginning19,000Cost of goods manufactured1,441,000Direct materials420,000 Direct labor641,000 Manufacturing overhead applied561,000 Balance, ending*200,000 *19,000 + (420,000 + 641,000 + 561,000) − 1,441,000 = 19,000 + (1,622,000) − 1,441,000 = 200,000
Ouelette Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows: AverageCost per UnitDirect materials$5.25 Direct labor$4.05 Variable manufacturing overhead$1.30 Fixed manufacturing overhead$3.00 Fixed selling expense$0.70 Fixed administrative expense$0.40 Sales commissions$0.50 Variable administrative expense$0.45 If 6,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:
$22,800 Total variable manufacturing overhead cost ($1.30 per unit × 6,000 units)$7,800Total fixed manufacturing overhead cost ($3.00 per unit × 5,000 units*) 15,000Total indirect manufacturing cost$22,800 *The average fixed manufacturing overhead cost per unit was determined by dividing the total fixed manufacturing overhead cost by 5,000 units.
Coates Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $249,000, variable manufacturing overhead of $3.80 per machine-hour, and 30,000 machine-hours. The company has provided the following data concerning Job X784 which was recently completed: Number of units in the job 50Total machine-hours 250Direct materials$470Direct labor cost$5,500 If the company marks up its unit product costs by 30% then the selling price for a unit in Job X784 is closest to: (Round your intermediate calculations to 2 decimal places.)
$233.87 Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $249,000 + ($3.80 per machine-hour × 30,000 machine-hours) = $249,000 + $114,000 = $363,000Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $363,000 ÷ 30,000 machine-hours = $12.10 per machine-hourOverhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $12.10 per machine-hour × 250 machine-hours = $3,025 Direct materials$470Direct labor 5,500Manufacturing overhead applied 3,025Total cost of Job X784$8,995 Total cost of Job X784 (a)$8,995Number of units (b) 50Unit product cost (a) ÷ (b)$179.90 Unit product cost for Job X784$179.90Markup (30% × $179.90) 53.97Selling price$233.87
Housholder Corporation uses a predetermined overhead rate base on machine-hours that it recalculates at the beginning of each year. The company has provided the following data for the most recent year. Estimated total fixed manufacturing overhead from thebeginning of the year$310,000 Estimated activity level from the beginning of the year 20,000machine-hoursActual total fixed manufacturing overhead$338,000 Actual activity level 18,300machine-hours The amount of manufacturing overhead that would have been applied to all jobs during the period is closest to: (Round your intermediate calculations to 2 decimal places.)
$283,650 Estimated total fixed manufacturing overhead (a)$310,000Estimated activity level (b) 20,000Predetermined overhead rate (a) ÷ (b)$15.50Actual activity level 18,300Manufacturing overhead applied$283,650
Steele Corporation uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. Steele Corporation has provided the following estimated costs for next year: Direct materials$20,000Direct labor$60,000Sales commissions$80,000Salary of production supervisor$40,000Indirect materials$8,000Advertising expense$16,000Rent on factory equipment$20,000 Steele estimates that 10,000 direct labor-hours and 16,000 machine-hours will be worked during the year. The predetermined overhead rate per hour will be:
$4.25 Salary of production supervisor$40,000Indirect materials 8,000Rent on factory equipment 20,000Manufacturing overhead$68,000 Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation basePredetermined overhead rate = $68,000 ÷ 16,000 machine-hours = $4.25 per machine-hour
Bernson Corporation is using a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $492,000 and 30,000 machine-hours for the period. The company incurred actual total fixed manufacturing overhead of $517,000 and 28,300 total machine-hours during the period. The amount of manufacturing overhead that would have been applied to all jobs during the period is closest to: (Round your intermediate calculations to 2 decimal places.)
$464,120 Estimated total fixed manufacturing overhead (a)$492,000Estimated activity level (b) 30,000Predetermined overhead rate (a) ÷ (b)$16.40Actual activity level 28,300Manufacturing overhead applied$464,120
Mundorf Corporation has two manufacturing departments—Forming and Assembly. The company used the following data at the beginning of the year to calculate predetermined overhead rates: FormingAssemblyTotalEstimated total machine-hours (MHs) 9,000 1,000 10,000Estimated total fixed manufacturing overhead cost$52,200$2,400$54,600Estimated variable manufacturing overhead cost per MH$2.00$2.10 During the most recent month, the company started and completed two jobs—Job B and Job H. There were no beginning inventories. Data concerning those two jobs follow: Job BJob HForming machine-hours 6,100 2,900Assembly machine-hours 400 600 Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. The amount of manufacturing overhead applied to Job B is closest to:
$48,555 The first step is to calculate the estimated total overhead costs in the two departments.Forming Estimated fixed manufacturing overhead$52,200Estimated variable manufacturing overhead ($2.00 per MH × 9,000 MHs) 18,000Estimated total manufacturing overhead cost$70,200 Assembly Estimated fixed manufacturing overhead$2,400Estimated variable manufacturing overhead ($2.10 per MH × 1,000 MHs) 2,100Estimated total manufacturing overhead cost$4,500The second step is to combine the estimated manufacturing overhead costs in the two departments ($70,200 + $4,500 = $74,700) to calculate the plantwide predetermined overhead rate as follow: Estimated total manufacturing overhead cost$74,700 Estimated total machine hours 10,000MHsPredetermined overhead rate$7.47per MHThe overhead applied to Job B is calculated as follows:Overhead applied to a particular job = Predetermined overhead rate × Machine-hours incurred by the job= $7.47 per MH × (6,100 MHs + 400 MHs)= $7.47 per MH × (6,500 MHs)= $48,555
Dominik Corporation purchased a machine 5 years ago for $527,000 when it launched product M08Y. Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model 310 machine costing $545,000 or by a new model 240 machine costing $450,000. Management has decided to buy the model 240 machine. It has less capacity than the model 310 machine, but its capacity is sufficient to continue making product M08Y. Management also considered, but rejected, the alternative of dropping product M08Y and not replacing the old machine. If that were done, the $450,000 invested in the new machine could instead have been invested in a project that would have returned a total of $532,000.In making the decision to invest in the model 240 machine, the opportunity cost was:
$532,000 Opportunity cost = Return from alternative investment = $532,000
Gallon Corporation had $24,000 of raw materials on hand on April 1. During the month, the Corporation purchased an additional $52,000 of raw materials. During April, $62,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $2,000. The debits to the Work in Process account as a consequence of the raw materials transactions in April total:
$60,000 Work in Process60,000 Manufacturing Overhead2,000 Raw Materials 62,000
In May direct labor was 60% of conversion cost. If the manufacturing overhead for the month was $54,000 and the direct materials cost was $30,000, the direct labor cost was:
$81,000 Direct labor = 0.60 × Conversion costManufacturing overhead = $54,000Conversion cost = Direct labor + Manufacturing overheadConversion cost = Direct labor + $54,000Conversion cost = (0.60 × Conversion cost) + $54,0000.40 × Conversion cost = $54,000Conversion cost = $54,000 ÷ 0.40Conversion cost = $135,000Direct labor = 0.60 × Conversion cost = 0.60 × $135,000 = $81,000
Kalp Corporation has two production departments, Machining and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department's predetermined overhead rate is based on machine-hours and the Finishing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: MachiningFinishingMachine-hours 19,000 12,000Direct labor-hours 2,000 8,000Total fixed manufacturing overhead cost$136,800$69,600Variable manufacturing overhead per machine-hour$1.80 Variable manufacturing overhead per direct labor-hour $3.20 During the current month the company started and finished Job K928. The following data were recorded for this job: Job K928:MachiningFinishingMachine-hours 90 10Direct labor-hours 30 50Direct materials$775$415Direct labor cost$630$1,050 The amount of overhead applied in the Machining Department to Job K928 is closest to:
$810.00 Machining Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department)= $136,800 + ($1.80 per machine-hour × 19,000 machine-hours)= $136,800 + $34,200 = $171,000Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base incurred = $171,000 ÷ 19,000 machine-hours = $9.00 per machine-hourOverhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $9.00 per machine-hour × 90 machine-hours = $810
Vignana Corporation manufactures and sells hand-painted clay figurines of popular sports heroes. Shown below are some of the costs incurred by Vignana for last year: Cost of clay used in production$65,000Wages paid to the workers who paint the figurines$90,000Wages paid to the sales manager's secretary$22,000Cost of junk mail advertising$47,000 What is the total of the conversion costs above?
$90,000 Conversion costs include only the wages paid to the workers who paint the figurines.
Lueckenhoff Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $497,000, variable manufacturing overhead of $2.40 per direct labor-hour, and 70,000 direct labor-hours. The company has provided the following data concerning Job T498 which was recently completed: Number of units in the job40Total direct labor-hours80Direct materials$950Direct labor cost$2,720 The estimated total manufacturing overhead is closest to:
665,000 Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $497,000 + ($2.40 per direct labor-hour × 70,000 direct labor-hours) = $497,000 + $168,000 = $665,000
A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $2,100 and is paid at the beginning of the first year. Sixty percent of the premium applies to manufacturing operations and forty percent applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage? ProductPeriodA)$280$420B)$420$280C)$700$0D)$0$700
Choice B Annual insurance expense = $2,100 ÷ 3 = $700Portion applicable to product cost = 0.60 × $700 = $420Portion applicable to period cost = 0.40 × $700 = $280
Tomlison Corporation is a manufacturer that uses job-order costing. The company has supplied the following data for the just completed year: Cost of goods manufactured$1,589,000Cost of goods sold (unadjusted)$1,517,000 The journal entry to record the unadjusted Cost of Goods Sold is:
Cost of Goods Sold1,517,000 Finished Goods 1,517,000
When closing overapplied manufacturing overhead to Cost of Goods Sold, which of the following would be true?
Gross margin will increase.
Which of the following statements is NOT correct concerning multiple overhead rate systems?
In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours.
Matthias Corporation has provided data concerning the Corporation's Manufacturing Overhead account for the month of May. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $53,000 and the total of the credits to the account was $69,000. Which of the following statements is true?
Manufacturing overhead applied to Work in Process for the month was $69,000. The credits to the Manufacturing overhead account consist of manufacturing overhead applied.
In the Schedule of Cost of Goods Manufactured and Cost of Goods Sold, the "Total raw materials available" is computed by adding together the "Beginning raw materials inventory" and:
Purchases of raw materials
Fils Inc. has provided the following data for the month of March. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month. Work In ProcessFinished GoodsCost of Goods SoldTotalDirect materials$4,080 $12,780 $59,940 $76,800 Direct labor 2,110 11,360 53,280 66,750 Manufacturing overhead applied 2,820 7,990 36,190 47,000 Total$9,010 $32,130 $149,410 $190,550 Manufacturing overhead for the month was underapplied by $4,000.The Corporation allocates any underapplied or overapplied manufacturing overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the manufacturing overhead applied during the month in those accounts.The journal entry to record the allocation of any underapplied or overapplied manufacturing overhead for March would include the following:
debit to Cost of Goods Sold of $3,080 Allocating underapplied manufacturing overhead increases the balances in the inventory and cost of goods sold accounts, resulting in debits to those accounts. Work in Process (6% × $4,000)$240 Finished Goods (17% × $4,000)$680 Cost of Goods Sold (77% × $4,000)$3,080 Manufacturing Overhead $4,000
In October, Raddatz Inc. incurred $73,000 of direct labor costs and $6,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a:
debit to Manufacturing Overhead of $6,000 Work in Process73,000 Manufacturing Overhead6,000 Salaries and Wages Payable 79,000
Overapplied manufacturing overhead would result if:
manufacturing overhead costs incurred were less than manufacturing overhead costs charged to production.