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In December 2019, Reiver Company's manager estimated next year's total direct labor cost assuming 50 persons working an average of 2,000 hours each at an
In December 2019, Reiver Company's manager estimated next year's total direct labor cost assuming 50 persons working an average of 2,000 hours each at an average wage rate of $15 per hour. The manager also estimated the following Manufacturing overhead costs for year 2019: Indirect labor ...... Factory supervision Rent on factory building Factory utilities Factory insurance expired. Depreciation - Factory equipment Repairs expense - Factory equipment Factory supplies used Miscellaneous production costs. Total estimated overhead costs $159,600 120,000 70,000 44,000 34,000 240,000 30,000 34,400 18,000 $750,000 At the end of 2020, records show the company incurred $725,000 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $354,000; Job 202, $330,000; Job 203, $175,000; Job 204, $420,000; and Job 205, $184,000. In addition, Job 206 is in process at the end of 2020 and had been charged $10,000 for direct labor. No jobs were in process at the end of 2018. The company's predetermined overhead rate is based on direct labor cost. Required: 1. Determine the following: a. Predetermined overhead rate for the year 2020. b. Total overhead cost applied to each of the six jobs during the year 2020. C. Over- or underapplied overhead at year-end 2020. 2. Assuming that any over or underapplied overhead is not material, prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold at the end of the year 2020
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