Milsaps Company Produces Makeup Mirrors

question 34

Essay

Milsaps Company produces makeup mirrors.In preparing the current year's budget, Milsaps' controller estimates a total of $300,000 in direct materials cost, $220,000 in direct labor cost, and $330,000 in manufacturing overhead costs.Since much of the production process requires skilled workers to assemble the mirrors, direct labor cost is used as the overhead application base.At the end of the year, Milsaps reported actual results as follows: direct materials cost of $290,000, direct labor cost of $210,000, and manufacturing overhead cost $310,000.
a.What is Milsaps' predetermined overhead rate for the year?
b.How much manufacturing overhead did Milsaps apply during the year?
c.What is the journal entry to close overhead if the amount is considered to be insignificant?

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Definitions:

Investment Sale

The process of selling securities or assets with the aim of generating returns such as capital gains or income.

Parent Company

A corporation that owns enough voting stock in another corporation to control its board of directors and therefore its policies and management.

Subsidiary

A company that is controlled by another entity, known as the parent company, through ownership of more than half of its voting stock or through other means.

Consolidated Net Income

The total profit of a parent company and its subsidiaries after all expenses, including those of subsidiary companies, are subtracted.