Fossil Manufacturing Uses a Predetermined Overhead Rate of $17

question 307

Essay

Fossil Manufacturing uses a predetermined overhead rate of $17.80 per direct labor-hour. This predetermined rate was based on 11,000 estimated direct-labor-hours and $195,800 of estimated total manufacturing overhead. The company incurred actual manufacturing overhead costs of $194,000 and 10,500 direct labor-hours.
Required:
a. Determine the amount of underapplied or overapplied manufacturing overhead for the period.
b. Assuming that the company closed manufacturing overhead to cost of goods sold, make the journal entry to close manufacturing overhead.
c. What is the effect of this entry on the company's gross margin?

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Definitions:

Attracting

The process of drawing interest to a product, service, or entity, often involving marketing strategies or talent acquisition efforts.

Retaining

The act of holding back or keeping something in position, often used in the context of maintaining employees or resources.

Development and Training

Programs aimed at improving the efficiency and abilities of personnel in an organizational setting.

Key Human Resource Practices

Fundamental HR functions and processes that are critical for the effective management and development of the workforce, including hiring, training, performance assessment, and employee relations.