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Tervis Tumblers Corporation produces an insulated coffee cup. Tervis Tumblers predetermined overhead rate is $18.30 per direct labor-hour. The predetermined rate was computed using a
Tervis Tumblers Corporation produces an insulated coffee cup. Tervis Tumblers predetermined overhead rate is $18.30 per direct labor-hour. The predetermined rate was computed using a formula that estimates total manufacturing overhead of $221,430 divided by total estimated activity level of 12,100 direct labor-hours. Tervis Tumblers actually incurred $217,000 of manufacturing overhead and 11,600 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 Goods 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 by 2. The gross margin would by
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