Exercise 3-4 Underapplied and Overapplied Overhead [LO3-4] Osborn Manufacturing uses a predetermined overhead rate of $18.20 per direct labor-hour. This predetermined rate was based on a cost formula that estimates $218,400 of total manufacturing overhead for an estimated activity level of 12,000 direct labor-hours. The company actually incurred $215,000 of manufacturing overhead and 11,500 direct labor-hours during the period. Required: 1. Determine the amount of underapplied or overapplied manufacturing overhead for the period. 2. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the journal entry to dispose of the underapplied or overapplied overhead increase or decrease the company's gross margin? By how much? by by 1. Manufacturing overhead 2. The gross margin would

Exercise 3-4 Underapplied and Overapplied Overhead [LO3-4] Osborn Manufacturing uses a predetermined overhead rate of $18.20 per direct labor-hour. This predetermined rate was based on a cost formula that estimates $218,400 of total manufacturing overhead for an estimated activity level of 12,000 direct labor-hours. The company actually incurred $215,000 of manufacturing overhead and 11,500 direct labor-hours during the period. Required: 1. Determine the amount of underapplied or overapplied manufacturing overhead for the period. 2. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the journal entry to dispose of the underapplied or overapplied overhead increase or decrease the company's gross margin? By how much? by by 1. Manufacturing overhead 2. The gross margin would

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

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Exercise 3-4 Underapplied and Overapplied Overhead [LO3-4]
Osborn Manufacturing uses a predetermined overhead rate of $18.20 per direct labor-hour. This predetermined rate was based on a
cost formula that estimates $218,400 of total manufacturing overhead for an estimated activity level of 12,000 direct labor-hours.
The company actually incurred $215,000 of manufacturing overhead and 11,500 direct labor-hours during the period.
Required:
1. Determine the amount of underapplied or overapplied manufacturing overhead for the period.
2. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the journal entry to
dispose of the underapplied or overapplied overhead increase or decrease the company's gross margin? By how much?
by
by
1. Manufacturing overhead
2. The gross margin would

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Exercise 7-32 (Algo) Prorate Over- or Underapplied Overhead (LO 7- 3) Yarra Fabrication estimates that its manufacturing overhead will be $2,316,800 in year 1. It further estimates that direct material costs will amount to $1,448,000. Actual manufacturing overhead costs for the year were $2,460,000. Actual direct materials costs were $1,610,000. Manufacturing overhead is applied to jobs based on direct materials cost using predetermined rates. The total applied overhead for the year was $2,576,000 The balance in each of the inventory accounts is as follows. Work-in-process inventory $ 484,000 Finished goods inventory $ 1,144,000 Cost of goods sold $ 7,172,000 Required: Prepare an entry to allocate the over- or underapplied overhead. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Problem 7-47 (Algo) Estimate Machine-Hours Worked from Overhead Data (LO 7-3) Melbourne Company estimated that machine-hours for the year would be 39,100 hours and overhead (all fixed) would be $144,670. Melbourne applies its overhead on the basis of machine-hours. During the year, all overhead costs were exactly as planned ($144,670). There was $22,200 in overapplied overhead. Required: How many machine-hours were worked during the period? (Do not round intermediate calculations.)
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Exercise 7-40 (Algo) Calculating Expected Activity Using the Predetermined Overhead Rate (LO 7-3) Auduon, Incorporated uses a predetermined factory overhead rate based on machine-hours. For October, Audubon recorded $5.300 In overapplied overhead, based on 34.900 actual machine-hours worked and actual manufacturing overhead incurred of $599,517 Audubon estimated manufacturing overhead for October to be $568,424. Required: What was the estimated number of machine-hours Audubon expected in October? Note: Do not round intermediate calculations. Expected machine-hours machine-hours
Exercise 15-26 (Algo) Computing applied overhead and closing over- or underapplied overhead LO P4 At the beginning of the year, Custom Manufacturing set its predetermined overhead rate using the following estimates: overhead costs, $960,000, and direct materials costs, $400,000.At year-end, the company reports that actual overhead costs for the year are $969,300 and actual direct materials costs for the year are $400,000. 1. Determine the predetermined overhead rate using estimated direct materials costs2. Enter the actual overhead costs incurred and the amount of overhead cost applied to jobs 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.
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PROBLEM I ABC Company's total overhead costs at various levels of activity are presented below: March April May June. Machine Hours Total Overhead Costs $216,800 $194,000 $239,600 $262,400 60,000 50,000 70,000 80,000 Assume that the overhead costs above consist of utilities, supervisory salaries, and maintenance. At the 50,000 machine-hour level of activity these costs are: Utilities (V). Supervisory salaries (F). Maintenance (M).. Total overhead cost V = Variable; F = Fixed; M = Mixed The company wants to break down the maintenance cost into its basic variable and fixed cost elements. Required: $ 54,000 62,000 78.000 $194.000 a. Estimate the maintenance cost for June. b. Use the high-low method to estimate the cost formula for maintenance cost. c. Estimate the total overhead cost at an activity level of 55,000 machine hours.
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