Millefeuille Company applies operating overhead to photocopying jobs on the basis of machine hours used. It expects overhead costs to total $290,000 for the year and estimates machine usage at 125,000 hours.
For the year, the company incurs $295,000 of overhead costs and uses 130,000 hours.
Instructions
(a) Calculate the service overhead rate for the year.
(b) Calculate the amount of under- or over-applied overhead at December 31.
(c) Assuming the under- or over-applied overhead for the year is not allocated to inventory accounts, prepare the adjusting entry to assign the amount to cost of jobs finished.