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Question
The predetermined overhead allocation rate for Forsythe, Inc., is based on estimated direct labor costs of $400,000 and estimated factory overhead of $500,000. Actual costs incurred were:
| Direct materials.. | $250,000 |
| Direct labor.. | 410,000 |
| Indirect materials | 55,000 |
| Indirect labor.. | 125,000 |
| Sales commissions. | 50,000 |
| Factory depreciation | 170,000 |
| Property taxes, factory... | 15,000 |
| Factory utilities.. | 35,000 |
| Advertising..... | 62,500 |
| Factory equipment rental | 100,000 |
(a) Calculate the predetermined overhead rate and calculate the overhead applied during the year.
(b) Determine the amount of over- or underapplied overhead and prepare the journal entry to eliminate the over- or underapplied overhead assuming that it is not material in amount.
Answer
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Related questions
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Although a fixed budget is only useful over the relevant range of operations, a flexible budget is useful over all possible production levels.
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A fixed budget performance report never provides useful information for evaluating variances.
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Use the following information to prepare a budgeted income statement for Arbor Company for the month of June.
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Q:
Use the following information to prepare the June cash budget for Arbor Company. It should show expected cash receipts and cash disbursement for the month and the cash balance expected on June 30.
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