Michael Paints Has Two Processes-Coloring Department and Mixing Department

question 110

Essay

Michael Paints has two processes-Coloring Department and Mixing Department. Michael sold 350 gallons on account at $110 per gallon. The total cost of processing was $385,000 for 5,500 gallons of paint. Throughout the year, Michael used a predetermined overhead allocation rate to allocate $75,000 and $65,000 of indirect costs to the Coloring Department and Mixing Department, respectively. The actual overhead cost incurred amounted to $150,000 at the end of the year. Record the necessary journal entries for the sale of goods and for adjustment of over/underallocated manufacturing overhead at the end of the year.

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Definitions:

Friendly Suitor

A company that makes an acquisition offer that the management of the target company approves of.

Hostile Bidder

An entity or individual that makes an offer to buy a company despite resistance or disapproval from the target company's board of directors.

Management Buyout

The acquisition of a company's controlling share by its management team, often with the assistance of external financiers.

Going-Private Transaction

A process in which a publicly traded company is transformed into a privately held entity by buying out the public shareholders.