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Accounting

Problem:

The predetermined overhead allocation rate for Constant, Inc., is based on estimated direct labor costs of $500,000 and estimated factory overhead of $550,000. Actual costs incurred were:

Direct Materials..................	$ 250,000
Direct Labor.......................	450,000
Indirect Materials...............	74,000
Indirect Labor.....................	118,000
Sales Commissions............	50,000
Factory Depreciation..........	180,000
Property Taxes, Factory.....	20,000
Factory Utilities..................	30,000
Advertising.........................	62,500
Factory Equipment Rental.....	99,000

Required:

Question 1: Calculate the predetermined overhead rate and calculate the overhead applied during the year.

Question 2: Determine the amount of over- or underapplied overhead and prepare the journal entry to eliminate the over- or under-applied overhead.

Note: Be sure to show how you arrived at your answer.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91164115

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