Ramirez Company Uses a Predetermined Overhead Rate

question 7

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.

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Definitions:

Memory Storage

The process of maintaining information over time and across varying conditions, a fundamental aspect of the human cognitive system.

Persistence

The quality of continuing steadfastly or firmly in a course of action despite difficulties or opposition.

Organization

The structured arrangement of resources and processes to achieve specific goals or the act of arranging elements in a systematic way.

Research Methods

Research methods encompass the techniques, strategies, and procedures used in scientific inquiry to gather, analyze, and interpret data, ensuring validity and reliability of results.