aces Exercise 3-4 (Algo) Underapplied and Overapplied Overhead [LO3-4] Osborn Manufacturing uses a predetermined overhead rate of $18.80 per direct labor-hour. This predetermined rate was based on a cost formula that estimates $236,880 of total manufacturing overhead for an estimated activity level of 12,600 direct labor-hours. The company actually incurred $233,000 of manufacturing overhead and 12,100 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 Godds Sold. Would the journal entry to dispose of the underapplied or overapplied overhead increase or decrease the company's gross margin? By how much? 1. Manufacturing overhead 2. The gross margin would by by

Principles of Accounting Volume 2
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ISBN:9781947172609
Author:OpenStax
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Chapter4: Job Order Costing
Section: Chapter Questions
Problem 8PA: Coops Stoops estimated its annual overhead to be $85,000 and based its predetermined overhead rate...
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Exercise 3-4 (Algo) Underapplied and Overapplied Overhead [LO3-4]
Osborn Manufacturing uses a predetermined overhead rate of $18.80 per direct labor-hour. This predetermined rate was based on a
cost formula that estimates $236,880 of total manufacturing overhead for an estimated activity level of 12,600 direct labor-hours.
The company actually incurred $233,000 of manufacturing overhead and 12,100 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 Godds Sold. Would the journal entry to
dispose of the underapplied or overapplied overhead increase or decrease the company's gross margin? By how much?
1. Manufacturing overhead
2. The gross margin would
by
by
Transcribed Image Text:aces Exercise 3-4 (Algo) Underapplied and Overapplied Overhead [LO3-4] Osborn Manufacturing uses a predetermined overhead rate of $18.80 per direct labor-hour. This predetermined rate was based on a cost formula that estimates $236,880 of total manufacturing overhead for an estimated activity level of 12,600 direct labor-hours. The company actually incurred $233,000 of manufacturing overhead and 12,100 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 Godds Sold. Would the journal entry to dispose of the underapplied or overapplied overhead increase or decrease the company's gross margin? By how much? 1. Manufacturing overhead 2. The gross margin would by by
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