B.COM II ADVANCED AND COST ACCOUNTING

The workings under the heading of Additional Working are not required according to the requirement of the examiner. These are only for understanding the solutions. For more help, visit www.a4accounting.net 2007 B.COM II ADVANCED AND COST ACCOUNTING PRIVATE Compiled and Solved by: S.Hussain

ADVANCED AND COST ACCOUNTING 2007 PRIVATE Instructions: Attempt any five questions, three from Section A and two from Section B. SECTION A (ADVANCED ACCOUNTING) Q.No.1 ACCOUNTING FOR COMPANIES ABSORPTION GIVEN On January 1, 2007 balance sheet of Zeeshan Ltd. appeared as follows: Cash 70,000 All for depreciation Building 100,000 Accounts receivable 70,000 Accounts payable 100,000 Merchandise inventory 50,000 Bonds payable 50,000 Equipment 50,000 Share capital Rs.10 550,000 Building 600,000 Retained earnings 40,000 840,000 840,000 Zeeshan Ltd. is absorbed on January 1, 2007 by Furqan Ltd. on the following terms: (i) All the assets and liabilities were taken over at book values except cash. (ii) Shareholders will get 60,000 shares of Rs.10 each in Furqan Ltd. (iii) Liquidation expenses paid by Zeeshan Ltd. amounted to Rs.20,000. (1) Compute purchase consideration. (2) Journal entries in the books of Zeeshan Ltd. (3) Journal entries in the books of Furqan Ltd. SOLUTION 1 (i) Computation of Purchase Consideration: To Shareholders: 60,000 ordinary shares @ Rs.10 each 600,000 Purchase consideration 600,000 SOLUTION 1 (ii) ZEESHAN LTD. 1 Receivable from Furqan Ltd. 600,000 Realization 600,000 (To record the purchase consideration) 2 Shares in 600,000 Receivable from Furqan Ltd. 600,000 (To record the shares and cash received from Furqan Ltd.) 3 Realization 670,000 Accounts receivable 70,000 Merchandise inventory 50,000 Equipment 50,000 Building 500,000 (To record the closing of all assets accounts) B. C o m II A d v a n c e d & C o s t A c c o u n t i n g 2 0 0 7 ( P r i v a t e ) Page 2

4 Accounts payable 100,000 Bonds payable 50,000 Realization 150,000 (To record the closing of liability account) 5 Realization 20,000 Cash 20,000 (To record the payment of liquidation expense) 6 Ordinary share capital 550,000 Retained earnings 40,000 Payable to shareholders 590,000 (To record the closing of shareholders equity) 7 Realization 60,000 Payable to shareholders 60,000 (To record the closing of realization account) 8 Payable to shareholders 650,000 Cash 50,000 Shares in 600,000 (To record the cash & shares issued to the shareholders) Realization 3 All assets 670,000 1 Receivable 600,000 5 Cash 20,000 4 Liabilities 150,000 7 Payable to shareholders 60,000 750,000 750,000 SOLUTION 1 (iii) FURQAN LTD. 1 Accounts receivable 70,000 Merchandise inventory 50,000 Equipment 50,000 Building 500,000 Goodwill 80,000 Accounts payable 100,000 Bonds payable 50,000 Payable to Zeeshan Ltd. 600,000 (To record the assets and liabilities taken over from Zeeshan Ltd.) 2 Payable to Zeeshan Ltd. 600,000 Ordinary shares capital (60,000 x 10) 600,000 (To record the shares issued to the Zeeshan Ltd.) B. C o m II A d v a n c e d & C o s t A c c o u n t i n g 2 0 0 7 ( P r i v a t e ) Page 3

Q.No.2 ANALYSIS OF FINANCIAL STATEMENT GIVEN The data given below were taken from the financial statements of Hamza Corporation for years 2005 & 2006. 2005 2006 Current assets 220,000 264,000 Current liabilities 165,000 140,000 Cash sales 200,000 300,000 Credit sales 450,000 560,000 Cost of goods sold 450,000 500,000 Merchandise inventory 95,000 106,000 Quick assets 70,000 75,000 Accounts receivable 60,000 66,000 Compute the following for 2005 & 2006. (i) Amount of working capital (ii) Current ratio (iii) Days of inventory turnover (iv) Quick ratio (v) Days of receivable turnover (vi) Rate of gross profit on sales (vii) Days of operating cycle in 2006 only SOLUTION 2 (i) Working Capital: Working capital = Current assets Current liabilities Working capital = 264,000 140,000 220,000 165,000 Working capital = 124,000 55,000 (ii) Current Ratio: Current ratio = Total current assets Total current liabilities Current ratio = 264,000 220,000 140,000 165,000 Current ratio = 1.89 : 1 1.33 : 1 (iii) Days of Inventory Turnover: Inventory turnover in times = Cost of goods sold Average inventory Inventory turnover in times = 500,000 450,000 (106,000+95,000)/2 95,000 Inventory turnover in times = 4.98 times 4.74 times Inventory turnover in days = 365 Inventory turnover times Inventory turnover in days = 365 365 4.98 4.75 Inventory turnover in days = 73 days 77 days B. C o m II A d v a n c e d & C o s t A c c o u n t i n g 2 0 0 7 ( P r i v a t e ) Page 4

(iv) Quick Ratio: Quick ratio = Total quick assets Total current liabilities Quick ratio = 75,000 70,000 140,000 165,000 Quick ratio = 0.54 : 1 0.42 : 1 (v) Days of Receivable Turnover: Receivable turnover in times = Net credit sales Average receivable Receivable turnover in times = 560,000 450,000 (66,000+60,000)/2 60,000 Receivable turnover in times = 8.89 times 7.50 times Receivable turnover in days = 365 Receivable turnover times Receivable turnover in days = 365 365 8.89 7.50 Receivable turnover in days = 41 days 49 days (vi) Rate of Gross Profit on Sales: Gross profit rate on sales = Gross profit X 100 Net sales Gross profit rate on sales = 360,000 X 100 200,000 X 100 860,000 650,000 Gross profit rate on sales = 41.86% 30.77% Computation of Gross Profit: Cash sales 300,000 200,000 Add: Credit sales 560,000 450,000 Net sales 860,000 650,000 Less: Cost of goods sold (500,000) (450,000) Gross profit 360,000 200,000 (vii) Days of Operating Cycle (2006): Days of operating cycle = Inventory turnover in days + Receivable turnover in days Days of operating cycle = 73 + 41 Days of operating cycle = 114 days B. C o m II A d v a n c e d & C o s t A c c o u n t i n g 2 0 0 7 ( P r i v a t e ) Page 5

Q.No.3 ACCOUNTING FOR INSTALLMENT SALES GIVEN The following transactions relate to Al-Abid Co. for 2006 which follows the perpetual inventory system and FIFO method for valuation of inventory. Opening inventory consist of 50 machines @ Rs.560 per machine. They completed the following transactions: (1) Purchased 350 machines @ Rs.600 per machine on account. (2) Sold 250 machines @ Rs.1,000 each on installments. (3) Received down payment @ Rs.200 per machine on all the sold machines. (4) Received 996 installments @ Rs.100 per installment. (5) Repossessed one machine from a customer who had paid only down payment having market value of Rs.500. Journal entries including adjusting and closing entries. Show all computations. SOLUTION 3 Computation of Cost of Installment Sales: Merchandise inventory opening (50 x 560) 28,000 Add: Purchases (350 x 600) 210,000 Merchandise available for sale 238,000 Less: Merchandise inventory ending (400 250) x (600) (90,000) Cost of installment sales 148,000 Computation of Installment Sales: Installment sales = Units sold x Selling price per unit Installment sales = 250 x 1,000 Installment sales = 250,000 Computation of Unrealized Gross Profit: Unrealized gross profit = Installment sales Cost of installment sales Unrealized gross profit = 250,000 148,000 Unrealized gross profit = 102,000 Computation of Unrealized Gross Profit Rate (DGP%): Unrealized gross profit rate = Unrealized gross profit x 100 Installment sales Unrealized gross profit rate = 102,000 x 100 250,000 Unrealized gross profit rate = 40.8% Computation of Cash Collection: Down payment (250 x 200) 50,000 Add: Installment received (996 x 100) 99,600 Total cash collection 149,600 Computation of Realized Gross Profit: Realized gross profit = Cash collection X DGP% Realized gross profit = 149,600 x 40.8% Realized gross profit = 61,037 B. C o m II A d v a n c e d & C o s t A c c o u n t i n g 2 0 0 7 ( P r i v a t e ) Page 6

Computation of Gain or Loss on Repossession: Installment sales 1,000 Less: Down payment received (200) Installment accounts receivable cancelled 800 Less: Unrealized gross profit (800 x 40.8%) (326) Book value 474 Less: Merchandise repossessed at fair market value (500) Gain on repossession 26 AL-ABID CO. 1 Merchandise 210,000 Accounts payable 210,000 (To record the merchandise purchased on account) 2 Installment accounts receivable 250,000 Installment sales 250,000 (To record the good sold on installment basis) 3 Cash 50,000 Installment accounts receivable 50,000 (To record the down payment received) 4 Cash 99,600 Installment accounts receivable 99,600 (To record the cash collected on installment basis) AL-ABID CO. ADJUSTING ENTRIES 1 Cost of installment sales 148,000 Merchandise 148,000 (To record the cost of installment sales) 2 Installment sales 250,000 Cost of installment sales 148,000 Unrealized gross profit 102,000 (To adjust the unrealized gross profit) 3 Unrealized gross profit 61,037 Realized gross profit 61,037 (To adjust the realized gross profit) 4 Merchandise repossessed 500 Unrealized gross profit 326 Gain on repossession 26 Installment accounts receivable 800 (To adjust the repossession of merchandise) B. C o m II A d v a n c e d & C o s t A c c o u n t i n g 2 0 0 7 ( P r i v a t e ) Page 7

AL-ABID CO. CLOSING ENTRIES 1 Realized gross profit 61,037 Gain on repossession 26 Expense and revenue summary 61,063 (To close the all income accounts) 2 Expense and revenue summary 61,063 Capital 61,063 (To close the expense and revenue summary account) Q.No.4 CASH FLOW STATEMENT GIVEN Muzammil Ltd. balance sheet as on Dec. 31, 2005 & 2006 are given below: Assets 31.12.2006 31.12.2005 Cash 35,000 37,000 Accounts receivable 70,000 68,000 Merchandise inventory 35,000 24,000 Plant 160,000 100,000 Total assets 300,000 229,000 Equities 31.12.2006 31.12.2005 Accounts payable 42,000 40,000 Bonds payable 30,000 --- Allowance for depreciation 28,000 20,000 Ordinary share capital 135,000 100,000 Retained earnings 65,000 69,000 Total equities 300,000 229,000 Cash dividend of Rs.10,000 and stock dividend of Rs.20,000 were declared during 2006. (1) Compute net income or loss for 2006. (2) Cash flow statement showing cash flows from operating, investing and financing activities. SOLUTION 4 (i) MUZAMMIL LTD. STATEMENT OF NET INCOME FOR THE PERIOD ENDED 31 DECEMBER 2006 Retained earnings (2006) 65,000 Less: Retained earnings (2005) (69,000) Retained earnings for the period (4,000) Add: Dividends: Cash dividend 10,000 Stock dividend 20,000 Total dividends 30,000 Net profit 26,000 B. C o m II A d v a n c e d & C o s t A c c o u n t i n g 2 0 0 7 ( P r i v a t e ) Page 8

SOLUTION 4 (ii) MUZAMMIL LTD. CASH FLOW STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 2006 Cash Flow from Operating Activities: Net profit 26,000 Adjustments: Add: Depreciation expense 8,000 Profit before changes in working capital 34,000 Less: Increase in accounts receivable (2,000) Less: Increase in merchandise inventory (11,000) Add: Increase in accounts payable 2,000 Net cash flow from operating activities 23,000 Cash Flow from Investing Activities: Purchase of plant (60,000) Net cash flow from investing activities (60,000) Cash Flow from Financing Activities: Issue of shares 15,000 Issue of bonds 30,000 Cash dividend (10,000) Net cash flow from financing activities 35,000 Net decrease in cash and cash equivalents (2,000) Add: Opening cash and cash equivalents balance 37,000 Closing cash and cash equivalents balance 35,000 Q.No.5 ACCOUNTING FOR BRANCH GIVEN On January 1, 2006, Bilal Co. of Karachi opened a branch at Multan. Following is the information for the month of January 2006: (i) Sent merchandise to branch at billed price of Rs.96,000. (ii) During the month additional shipment was made at billed price of Rs.60,000. (iii) Branch returned merchandise of billed price Rs.4,800 during January. (iv) At the end of January the inventory (at billed price) held by branch amounted to Rs.30,000. (v) Branch reported net profit of Rs.4,000 for the month. The head office followed the practice of billing the branch at 20% above cost of merchandise. (1) Give journal entries in the books of head office including adjustment of overvaluation. (2) Give journal entries in the books of Multan branch. Note: Where computation of overvaluation is required entries without computation will not be accepted. B. C o m II A d v a n c e d & C o s t A c c o u n t i n g 2 0 0 7 ( P r i v a t e ) Page 9

SOLUTION 5 (i) BILAL CO. HEAD OFFICE FOR THE MONTH OF JANUARY 2006 1 Multan branch 96,000 Merchandise supplied 80,000 Allowance for overvaluation 16,000 (To record the merchandise sent to branch) 2 Multan branch 60,000 Merchandise supplied 50,000 Allowance for overvaluation 10,000 (To record the merchandise sent to branch) 3 Merchandise returned 4,000 Allowance for overvaluation 800 Multan Branch 4,800 (To record the merchandise returned by branch) 4 Multan branch 4,000 Profit and loss account 4,000 (To record the profit reported by branch) 5 Allowance for overvaluation 20,200 Profit and loss account 20,200 (To adjust the allowance for overvaluation) SOLUTION 5 (ii) BILAL CO. MULTAN BRANCH FOR THE MONTH OF JANUARY 2006 1 Merchandise received 96,000 Head office 96,000 (To record the merchandise received from head office) 2 Merchandise received 60,000 Head office 60,000 (To record the merchandise received from head office) 3 Head office 4,800 Merchandise returned 4,800 (To record the merchandise returned to head office) 4 Expense and revenue summary 4,000 Head office 4,000 (To record the net profit reported to head office) B. C o m II A d v a n c e d & C o s t A c c o u n t i n g 2 0 0 7 ( P r i v a t e ) Page 10

Computation of Allowance for Overvaluation: Particulars Billed Cost Allowance for over valuation Merchandise supplied (96,000 x 20/120) 96,000 80,000 16,000 Add: Merchandise supplied (60,000 x 20/120) 60,000 50,000 10,000 156,000 130,000 26,000 Less: Merchandise returned (4,800 x 20/120) (4,800) (4,000) (800) Unadjusted allowance for overvaluation 151,200 126,000 25,200 Less: Merchandise inventory ending (30,000 x 20/120) (30,000) (25,000) (5,000) Adjusted allowance for overvaluation 121,200 101,000 20,200 SECTION B (COST ACCOUNTING) Q.No.6 JOB ORDER COSTING (a) GIVEN Danish Corporation produces special product as to customer specifications and uses the job order cost system. The following data relates to its operations of December 2006. (1) Purchased raw material on account Rs.60,000. (2) Raw material issued to factory Rs.43,000 of which Rs.4,000 was used indirectly. (3) Factory labour used direct Rs.65,000 and indirect Rs.5,500. (4) Factory overhead cost incurred on account Rs.44,000. (5) Factory overhead applied at 100% of direct labour cost. (6) Jobs were completed to the extent of 80%. (7) Goods sold on account Rs.200,000. (8) Finished goods inventory on Dec. 31, 2006 is Rs.18,400. Record the above transactions in journal also close over or under applied factory overhead at the end of month. (b) GIVEN The following information is taken from the financial statements of Abdul Rehman Co. at the end of 2006: Cost of raw materials used. Rs.160,000 Cost of goods manufactured. Rs.380,000 Factory overhead, 75% of direct labour. Rs.90,000 Goods in process inventory on Dec. 31, 2005. Rs.36,000 Compute the cost of goods in process inventory at December 31, 2006. SOLUTION 6 (a) DANISH CORPORATION FOR THE PERIOD DECEMBER 2006 1 Raw materials 60,000 Accounts payable 60,000 (To record the purchase of raw material on account) 2 Work in process 39,000 Factory overhead 4,000 Raw material 43,000 (To record the raw material issued) B. C o m II A d v a n c e d & C o s t A c c o u n t i n g 2 0 0 7 ( P r i v a t e ) Page 11

3 Work in process 65,000 Factory overhead 5,500 Accrued payroll 70,500 (To record the direct and indirect labour used) 4 Factory overhead 44,000 Accounts payable 44,000 (To record the factory overhead costs incurred) 5 Work in process (65,000 x 100%) 65,000 Factory overhead applied 65,000 (To record the applied factory overhead) 6 Finished goods 135,200 Work in process 135,200 (To record the goods completed and transferred to finished goods) 7 Accounts receivable 200,000 Sales 200,000 (To record the goods sold on account) 8 Cost of goods sold 116,800 Finished goods 116,800 (To record the cost of goods sold) 9 Over-applied factory overhead 11,500 Cost of goods sold 11,500 (To adjust the over-applied factory overhead) Computation of Cost of Goods Completed: Direct material 39,000 Add: Direct labour 65,000 Prime cost 104,000 Add: Factory overhead applied 65,000 Manufacturing cost 169,000 Goods completed 80% Cost of goods completed 135,200 Computation of Cost of Goods Sold: Cost of goods manufactured 135,200 Less: Finished goods ending inventory (18,400) Cost of goods sold 116,800 Factory Overhead 2 Raw material 4,000 5 Work in process 65,000 3 Accrued payroll 5,500 4 Accounts payable 44,000 9 Cost of goods sold 11,500 65,000 65,000 B. C o m II A d v a n c e d & C o s t A c c o u n t i n g 2 0 0 7 ( P r i v a t e ) Page 12

SOLUTION 6 (b) Computation of Goods in Process Ending Inventory: Direct material used 160,000 Add: Direct labour (90,000 x 100/75) 120,000 Prime cost 280,000 Add: Factory overhead 90,000 Manufacturing cost 370,000 Add: Goods in process opening inventory 36,000 Total goods in process during the period 406,000 Less: Cost of goods manufactured (380,000) Goods in process ending inventory 26,000 Q.No.7 PROCESS COST SYSTEM GIVEN The following information was taken from the records of Faisal Manufacturing Co. for the month of January 2006. (1) Cost of units in process on Jan. 1, 2006 Rs.30,000. (2) Cost of raw material used Rs.81,400. (3) Direct labour cost incurred Rs.64,800. (4) Factory overhead cost incurred Rs.43,200. The data extracted from the production report relating to above process is as follows: (1) Units in process at end of January 2006 3,000 units (60% complete as to material and 80% complete as to conversion cost). (2) Units placed in production during the month 13,000 units (3) Units in process on January 1, 2006 5,000 units (40% complete as to material and 60% complete as to conversion cost). (1) Equivalent production during the month. (2) Unit cost. (3) Cost of units completed. (4) Cost of ending inventory of goods in process. (5) Journal entries to record cost allocated to production and cost of goods completed during the month. SOLUTION 7 (i) Computation of Number of Units Completed: Work in process beginning inventory in units 5,000 Add: Units placed in production 13,000 Total work in process during the period 18,000 Less: Work in process ending inventory in units (3,000) Number of units completed 15,000 B. C o m II A d v a n c e d & C o s t A c c o u n t i n g 2 0 0 7 ( P r i v a t e ) Page 13

FAISAL MANUFACTURING CO. EQUIVALENT PRODUCTION UNITS FOR THE PERIOD JANUARY 2006 Particulars Material Equivalent Units Labour Equivalent Units Overhead Equivalent Units Units completed & transferred to finished 15,000 15,000 15,000 goods Add: Work in process (ending): (WIP ending units x % of completion) Direct material (3,000 x 60%) 1,800 Direct labour (3,000 x 80%) 2,400 Factory overhead (30,000 x 80%) 2,400 Work in process during the period 16,800 17,400 17,400 Less: Work in process (opening): Direct material (5,000 x 40%) (2,000) Direct labour (5,000 x 60%) (3,000) Factory overhead (5,000 x 60%) (3,000) Equivalent production in units 14,800 14,400 14,400 SOLUTION 7 (ii) FAISAL MANUFACTURING CO. PER UNIT COST FOR THE PERIOD JANUARY 2006 Particular Cost Equivalent Units Per Unit Cost Direct material 81,400 14,800 5.5 Direct labour 64,800 14,400 4.5 Factory overhead 43,200 14,400 3.0 Total per unit cost 189,400 13.0 SOLUTION 7 (iii) FAISAL MANUFACTURING CO. STATEMENT OF UNITS COMPLETED AND TRANSFERRED TO FINISHED GOODS FOR THE PERIOD JANUARY 2006 Cost of Work in Process Opening Inventory: Cost b/d from last month 30,000 Add: Cost Applied During This Month From Work in Process Beginning Inventory: (WIP opening units x % of completion x unit cost of element) Direct material (5,000 x 60% x 5.5) 16,500 Direct labour (5,000 x 40% x 4.5) 9,000 Factory overhead (5,000 x 40% x 3.0) 6,000 Total cost applied during this month from work in process beginning inventory 31,500 Total cost of work in process beginning inventory 61,500 Add: Remaining Units Completed During This Month: (Units completed WIP opening units) x Unit cost Total cost of remaining units completed (10,000 x 13.00) 130,000 Total cost of units completed and transferred to finished goods 191,500 B. C o m II A d v a n c e d & C o s t A c c o u n t i n g 2 0 0 7 ( P r i v a t e ) Page 14

SOLUTION 7 (iv) FAISAL MANUFACTURING CO. STATEMENT OF COST OF WORK IN PROCESS ENDING INVENTORY FOR THE PERIOD JANUARY 2006 (WIP ending units x % of completion) x unit cost of element Direct material (3,000 x 60% x 5.5) 9,900 Direct labour (3,000 x 80% x 4.5) 10,800 Factory overhead (3,000 x 80% x 3.0) 7,200 Cost of work in process ending inventory 27,900 SOLUTION 7 (v) FAISAL MANUFACTURING CO. FOR THE PERIOD JANUARY 2006 1 Work in process 189,400 Raw material 81,400 Accrued payroll 64,800 Factory overhead applied 43,200 (To record the manufacturing cost) 2 Finished goods 191,500 Work in process 191,500 (To record the cost of goods completed and transferred to finished goods) Q.No.8 STANDARD COST AND VARIANCES (a) GIVEN The standard and actual cost data of Arif Co. are as follows: Standard Actual Direct material 20,000 units @ Rs.4 per unit 19,600 units @ Rs.3.50 per unit Direct labour 10,000 hours @ Rs.10 per hour 11,000 hours @ Rs.10.50 per hour (1) Material price variance (2) Material quantity variance (3) Labour rate variance (4) Labour time variance (5) Journal entries for recording of variances with actual and standard cost. (b) GIVEN Standard Cost F. Overhead Variance (Favourable) Factory overhead Rs.96,000 Rs.6,000 (i) Determine the actual factory overhead. (ii) Record the factory overhead costs and its variances. SOLUTION 8 (a) Computation of Material Price Variance: Material price variance = (Standard price Actual price) x Actual quantity Material price variance = (4.00 3.50) x 19,600 Material price variance = 9,800 (Favourable) B. C o m II A d v a n c e d & C o s t A c c o u n t i n g 2 0 0 7 ( P r i v a t e ) Page 15

Computation of Material Quantity Variance: Material quantity variance = (Standard quantity Actual quantity) x Standard price Material quantity variance = (20,000 19,600) x 4.00 Material quantity variance = 1,600 (Favourable) Computation of Labour Rate Variance: Labour rate variance = (Standard price Actual price) x Actual hours Labour rate variance = (10.00 10.50) x 11,000 Labour rate variance = (5,500) (Unfavourable) Computation of Labour Time Variance: Labour time variance = (Standard hours Actual hours) x Standard price Labour time variance = (10,000 11,000) x 10.00 Labour time variance = (10,000) (Unfavourable) ARIF CO. 1 Work in process (20,000 x 4) 80,000 Material price variance 9,800 Material quantity variance 1,600 Raw material (19,600 x 3.50) 68,600 (To record the material price and quantity variance) 2 Work in process (10,000 x 10) 100,000 Labour rate variance 5,500 Labour efficiency variance 10,000 Accrued payroll (11,000 x 10.50) 115,500 (To record the labour rate and efficiency variance) SOLUTION 8 (b) Computation of Actual Cost of Factory Overhead: Actual cost of factory overhead = Standard cost Total factory overhead variance Actual cost of factory overhead = 96,000 6,000 Actual cost of factory overhead = 90,000 M/S. 1 Work in process 96,000 Factory overhead variance 6,000 Factory overhead applied 9,000 (To record the factory overhead variance) B. C o m II A d v a n c e d & C o s t A c c o u n t i n g 2 0 0 7 ( P r i v a t e ) Page 16