Chapter 12, Problem 12.1CTFSC

Patton Manufacturing applies factory overhead based on direct labor hours. At the beginning of the year, it was estimated that factory overhead costs would be $850,000 and direct labor hours would be 50,000. The actual manufacturing overhead costs incurred were $795,000, and the actual direct labor hours worked were 45,000. The entry to apply the factory overhead costs for the year would include a: a. credit to Factory Overhead for $765,000 b. debit to Factory Overhead for $795,000 c. debit to Factory Overhead for $765,000 d. credit to Factory Overhead for $850,000

Can you explain the correct methodology to solve this financial accounting problem?

I need step by step. Service revenue is $100,000 and expenses are $70,000.What is the net income to be closed to retained earnings?