Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 incurred actual total manufacturing overhead costs of $233,000 and 12,100 total direct labor-hours during the period.

Required:
1.

Determine the amount of underapplied or overapplied manufacturing overhead for the period.

2.

Assuming that the entire amount of the underapplied or overapplied overhead is closed out to cost of goods sold, what would be the effect of the underapplied or overapplied overhead on the company's gross margin for the period?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing

Authors: Karla M. Johnstone, Audrey A. Gramling, Larry E. Rittenberg

8th International Edition

0538477660, 978-0538477666

More Books

Students also viewed these Accounting questions