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:
Gain on Sale
A financial gain that occurs when the selling price of an asset exceeds its purchase price or book value.
Stock Investment
The purchase of shares in a company with the expectation of earning a return on investment through dividends, share price appreciation, or both.
Dividend
A portion of a company's earnings distributed to shareholders as a reward for their investment.
Fair Value
An estimate of the market price for assets or liabilities, reflecting what a willing buyer would pay a willing seller in an arm's length transaction.
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