Estimates Made for a Production Department of the Automate Company

question 6

Essay

Estimates made for a production department of the Automate Company for the month of October show: Factory overhead is applied on the basis of direct labor hours. On October 31, the records show these actual figures: Prepare the entry or entries to 1) apply factory overhead to production; 2) record actual factory overhead incurred assuming all items were purchased from vendors; 3) close out the two factory overhead account balances to set up the overapplied or underapplied factory overhead; and 4) to close the balance in under- or overapplied factory overhead to Cost of Goods Sold.

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Definitions:

Resource Inputs

The basic materials and components required in the production process to create goods or services.

Product Outputs

Product outputs refer to the goods or services produced as a result of manufacturing processes or business activities.

Total Costs

The total expense of production, encompassing both non-changing and changing costs.

Average Product

The output per unit of input, calculated by dividing total product by the total quantity of input used to produce that output.