Kwik Products Uses a Predetermined Overhead Application Rate of $18

question 3

Essay

Kwik Products uses a predetermined overhead application rate of $18 per labor hour. A review of the company's accounting records revealed budgeted manufacturing overhead for the period of $621,000, applied manufacturing overhead of $590,400, and overapplied overhead of $11,900.
Required:
A. Determine Kwik's actual labor hours, budgeted labor hours, and actual manufacturing overhead.
B. Present the necessary year-end journal entry to handle the overapplied overhead, assuming that the firm allocates over- or underapplied overhead to Cost of Goods Sold.

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Definitions:

Two Points

In finance, two points refer to a one percent change in the face value of a financial instrument like a loan or mortgage, often related to fees or interest rates.

Variable Cost Per Unit

The cost that changes with the level of output or production, expressed on a per unit basis.

Total Fixed Costs

The sum of all costs that remain constant regardless of the level of production or sales volumes.

Volume Levels

Refers to the varying intensities or amounts of sound, production, or activity in a given context.