Ramirez Company Uses a Predetermined Overhead Rate

question 71

Essay

Ramirez Company uses a predetermined overhead rate. Overhead for the next twelve months is estimated to be $500,000. Ramirez applies overhead as a percentage of direct labor cost. Direct labor costs are estimated to be $625,000 for the next year. During the year actual direct labor costs amounted to $600,000 and the actual overhead was as follows: Required:
(1) Calculate the over/under-applied overhead for the year.
(2) Prepare the journal entry to close the overhead accounts, assuming that the over/under-applied overhead is closed to cost of goods sold.

---

Definitions:

Hispanic Americans

Citizens or residents of the United States who are of Hispanic or Latino origin, representing a diverse range of cultures and backgrounds.

European Americans

Individuals in the United States who have European ancestry.

Smoking

The act of inhaling and exhaling the smoke of burning tobacco or other substances, often associated with various health risks.

Health Literacy

The extent to which people are able to acquire, interpret, and comprehend essential health information and services to make suitable health choices.