LO1 Menotti Company uses a predetermined overhead rate to assign overhead to jobs. Be- cause Menotti's...
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LO1 Menotti Company uses a predetermined overhead rate to assign overhead to jobs. Be- cause Menotti's production is machine intensive, overhead is applied on the basis of machine hours. The expected overhead for the year was $3.8 million, and the practical level of activity is 250,000 machine hours. During the year, Menotti used 255,000 machine hours and incurred actual over- head costs of $3.82 million. Menotti also had the following balances of appliced over- head in its accounts: Work-in-Process Inventory Finished Goods Inventory S 384,000 416,000 1,200,000 Cost of Goods Sold Required: 1. Compute a predetermined overhead rate for Menotti. 2. Compute the overhead variance, and label it as under- or overapplied. 3. Assuming the overhead variance is immaterial, prepare the journal entry to dis- pose of the variance at the end of the year. 4. Assuming the overhead variance is material, prepare the journal entry that appro- priately disposes of the overhead variance at the end of the year. LO1 Menotti Company uses a predetermined overhead rate to assign overhead to jobs. Be- cause Menotti's production is machine intensive, overhead is applied on the basis of machine hours. The expected overhead for the year was $3.8 million, and the practical level of activity is 250,000 machine hours. During the year, Menotti used 255,000 machine hours and incurred actual over- head costs of $3.82 million. Menotti also had the following balances of appliced over- head in its accounts: Work-in-Process Inventory Finished Goods Inventory S 384,000 416,000 1,200,000 Cost of Goods Sold Required: 1. Compute a predetermined overhead rate for Menotti. 2. Compute the overhead variance, and label it as under- or overapplied. 3. Assuming the overhead variance is immaterial, prepare the journal entry to dis- pose of the variance at the end of the year. 4. Assuming the overhead variance is material, prepare the journal entry that appro- priately disposes of the overhead variance at the end of the year.
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Plantwide Overhead rate Overhead costs are all the costs other than direct material and direct labor that are not tied to the production Kenton 2019 Businesses use the manufacturing overhead rate to a... View the full answer
Related Book For
Cost Management Accounting and Control
ISBN: 978-0324559675
6th Edition
Authors: Don R. Hansen, Maryanne M. Mowen, Liming Guan
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