The predetermined overhead allocation rate for Forsythe,Inc.,is based on estimated direct labor costs of $400,000 and estimated factory overhead of $500,000.Actual costs incurred were:
(a)Calculate the predetermined overhead rate and calculate the overhead applied during the year.
(b)Determine the amount of over- or underapplied overhead and prepare the journal entry to eliminate the over- or underapplied overhead assuming that it is not material in amount.
Definitions:
Payment Of Dividends
The distribution of a portion of a company's earnings to its shareholders, usually in the form of cash or additional shares.
Interest Expense
The expense that an entity has to bear for the money it borrows over a certain duration.
Preferred Stock
A type of stock that offers dividends at a fixed rate and has priority over common stock in the distribution of assets during a company's liquidation.
Statement Of Cash Flows
A report detailing the movements in cash and cash equivalents due to variations in the balance sheet positions and income, segmented by operations, investments, and financing actions.
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