Cretin Enterprises uses a predetermined overhead rate of $7 .50 per direct labour hour. This predetermined rate

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Cretin Enterprises uses a predetermined overhead rate of $7 .50 per direct labour hour. This predetermined rate was based on 16,000 estimated direct labour-hours and $120,000 of estimated total manufacturing overhead. The company incurred actual total manufacturing overhead costs of $114,750 and 15,500 total direct labour-hours during the period. There were no beginning inventories, and all goods produced in the period were shipped out to customers before period end. 


Required:

1. Determine the amount of under applied or over applied manufacturing overhead for the period.

2. What is the effect on gross margin for the period?

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Managerial Accounting

ISBN: 9781259275814

11th Canadian Edition

Authors: Ray H Garrison, Alan Webb, Theresa Libby

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