The Predetermined Overhead Rate for Foster, Inc (A) Calculate the Predetermined Overhead Rate and Calculate the Overhead

question 116

Essay

The predetermined overhead rate for Foster, Inc., is based on estimated direct labor costs of $400,000 and estimated factory overhead of $500,000. Actual costs incurred were:
$\begin{array}{|l|c|}\hline \text { Direct materials } & \$ 240,000 \\\hline \text { Direct labor} & 410,000 \\\hline \text { Indirect materials. } & 55,000 \\\hline \text { Indirect labor } & 125,000 \\\hline \text { Sales commissions } & 55,000 \\\hline \text { Factory depreciation } & 170,000 \\\hline \text { Property taxes, factory......... } & 15,000 \\\hline \text { Factory utilities. } & 35,000 \\\hline \text { Advertising......... } & 62,500 \\\hline\text { Factory equipment rental. }&110,000\\\hline\end{array}$
(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.

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Definitions:

Apnea

A temporary cessation of breathing, especially during sleep.

Sleeplessness

The condition of being unable to sleep, also known as insomnia.

Sleep Apnea

A condition where an individual experiences interruptions in breathing or instances of light breathing while asleep.

Serious Sleep Apnea

A severe form of sleep apnea characterized by frequent interruptions of breathing during sleep, leading to significant health risks.