Excellent Products, Inc., uses a budgeted factory overhead rate to apply overhead to production. The following data are available for the year ended December 31, 2018.
Required:
a.Determine the budgeted factory overhead rate based on direct labor-hours.
b.What is the applied overhead based on direct labor-hours?
c.Is overhead overapplied or underapplied? Explain.
Definitions:
Discontinue
To stop making or providing a product or service, often as a strategic decision by a company.
Sunk Cost
Expenses that have already been incurred and cannot be recovered or altered, which should not affect future business decisions.
Materials Costs
The expense incurred by acquiring raw materials necessary for producing goods, excluding indirect materials like maintenance supplies.
Processing Costs
Expenses related to the steps involved in transforming raw materials into finished goods.
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