Fossil Manufacturing Uses a Predetermined Overhead Rate of $17

question 307

Essay

Fossil Manufacturing uses a predetermined overhead rate of $17.80 per direct labor-hour. This predetermined rate was based on 11,000 estimated direct-labor-hours and $195,800 of estimated total manufacturing overhead. The company incurred actual manufacturing overhead costs of $194,000 and 10,500 direct labor-hours.
Required:
a. Determine the amount of underapplied or overapplied manufacturing overhead for the period.
b. Assuming that the company closed manufacturing overhead to cost of goods sold, make the journal entry to close manufacturing overhead.
c. What is the effect of this entry on the company's gross margin?

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Definitions:

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Condemned or doomed, especially in a religious context to eternal punishment; or used informally to express disapproval.

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Refers to a period of political instability in the Chesapeake region, historically marked by conflicts and governance issues.

Virginia

A state located on the East Coast of the United States, known for its significant history, including being one of the original 13 colonies.