Malik’s Bookshop applies operating overhead to printing jobs on the basis of machine hours used. Overhead costs are expected to total $360,000 for the year, and machine usage is estimated at 125,000 hours. For the year, $395,000 of overhead costs are incurred and 130,000 hours are used. Instructions (a) Compute the service overhead rate for the year. (b) What is the amount of under- or overapplied overhead at December 31? (c) Assuming the under- or overapplied overhead for the year is not allocated to inventory accounts, prepare the adjusting entry to assign the amount to cost of jobs finished.
Malik’s Bookshop applies operating overhead to printing jobs on the basis of machine hours used. Overhead costs are expected to total $360,000 for the year, and machine usage is estimated at 125,000 hours. For the year, $395,000 of overhead costs are incurred and 130,000 hours are used. Instructions (a) Compute the service overhead rate for the year. (b) What is the amount of under- or overapplied overhead at December 31? (c) Assuming the under- or overapplied overhead for the year is not allocated to inventory accounts, prepare the adjusting entry to assign the amount to cost of jobs finished.
Malik’s Bookshop applies operating overhead to printing jobs on the basis of machine hours used. Overhead costs are expected to total $360,000 for the year, and machine usage is estimated at 125,000 hours. For the year, $395,000 of overhead costs are incurred and 130,000 hours are used. Instructions (a) Compute the service overhead rate for the year. (b) What is the amount of under- or overapplied overhead at December 31? (c) Assuming the under- or overapplied overhead for the year is not allocated to inventory accounts, prepare the adjusting entry to assign the amount to cost of jobs finished.
Malik’s Bookshop applies operating overhead to printing jobs on the basis of machine hours used. Overhead costs are expected to total $360,000 for the year, and machine usage is estimated at 125,000 hours. For the year, $395,000 of overhead costs are incurred and 130,000 hours are used.
Instructions
(a) Compute the service overhead rate for the year. (b) What is the amount of under- or overapplied overhead at December 31? (c) Assuming the under- or overapplied overhead for the year is not allocated to inventory accounts, prepare the adjusting entry to assign the amount to cost of jobs finished.
Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.
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