Exercise 2-27 (Algo) Computing applied overhead and closing over- or underapplied overhead LO P4 At the beginning of the year, Mirmax set its predetermined overhead rate for movies produced during the year by using the following estimates: overhead costs, $2,288,000, and direct labor costs, $440,000. At year-end, the company's actual overhead costs for the year are $2,277,600 and actual direct labor costs for the year are $440,000. 1. Determine the predetermined overhead rate using estimated direct labor costs. 2. Enter the actual overhead costs incurred and the amount of overhead cost applied to movies during the year using the predetermined overhead rate. Determine whether overhead is over- or underapplied (and the amount) for the year. 3. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
![Exercise 2-27 (Algo) Computing applied overhead and closing over- or underapplied overhead LO
P4
At the beginning of the year, Mirmax set its predetermined overhead rate for movies produced during the year by using the
following estimates: overhead costs, $2,288,000, and direct labor costs, $440,000. At year-end, the company's actual overhead
costs for the year are $2,277,600 and actual direct labor costs for the year are $440,000.
1. Determine the predetermined overhead rate using estimated direct labor costs.
2. Enter the actual overhead costs incurred and the amount of overhead cost applied to movies during the year using the
predetermined overhead rate. Determine whether overhead is over- or underapplied (and the amount) for the year.
3. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Required 3
Determine the predetermined overhead rate using estimated direct labor costs.
Overhead Rate](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff52fff1c-fcd6-4b93-93ac-ca1e74bff025%2Fa0e54cec-09a6-4f7a-b44d-df502e7c96a4%2F024pqb_processed.jpeg&w=3840&q=75)
![Required 1 Required 2 Required 3
Determine the predetermined overhead rate using estimated direct labor costs.
Overhead Rate
Numerator:
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1
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1
1
Denominator:
Journal entry worksheet
Date
December 31
< Required 1
Note: Enter debits before credits.
Record entry
Required 1 Required 2 Required 3
Enter the actual overhead costs incurred and the amount of overhead cost applied to movies during the year using the
predetermined overhead rate. Determine whether overhead is over- or underapplied (and the amount) for the year.
Factory Overhead
< Required 1
=
General Journal
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Record entry to close underapplied /overapplied overhead.
Clear entry
=
Overhead Rate
Overhead rate
Required 2 >
Required 3 >
Debit
Credit
View general journal](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff52fff1c-fcd6-4b93-93ac-ca1e74bff025%2Fa0e54cec-09a6-4f7a-b44d-df502e7c96a4%2Fo1hoaew_processed.jpeg&w=3840&q=75)
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