4. Renteria Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $305,000 for the year, and machine usage is estimated at 125,000 hours. For the year, $322,000 of overhead costs are incurred and 130,000 hours are used. Instructions (a) Compute the manufacturing overhead rate for the year. (b) What is the amount of under- or over-applied overhead at December 31? (c) Assuming the under or over-applied overhead for the year is not allocated to inventory accounts, prepare the adjusting entry to assign the amount to cost of goods sold.

4. Renteria Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $305,000 for the year, and machine usage is estimated at 125,000 hours. For the year, $322,000 of overhead costs are incurred and 130,000 hours are used. Instructions (a) Compute the manufacturing overhead rate for the year. (b) What is the amount of under- or over-applied overhead at December 31? (c) Assuming the under or over-applied overhead for the year is not allocated to inventory accounts, prepare the adjusting entry to assign the amount to cost of goods sold.

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Description: 4. Renteria Company applies manufacturing overhead to jobs on thebasis of machine hours used. Overhead costs are expected to total$305,000 for the year, and machine usage is estimated at 125,000hours. For the year, $322,000 of overhead costs are inc

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

4. Renteria Company applies manufacturing overhead to jobs on the
basis of machine hours used. Overhead costs are expected to total
$305,000 for the year, and machine usage is estimated at 125,000
hours. For the year, $322,000 of overhead costs are incurred and
130,000 hours are used.
Instructions
(a) Compute the manufacturing overhead rate for the year.
(b) What is the amount of under- or over-applied overhead at
December 31?
(c) Assuming the under or over-applied overhead for the year is not
allocated to inventory accounts, prepare the adjusting entry to assign
the amount to cost of goods sold.

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