The Predetermined Overhead Allocation Rate for Forsythe,Inc (ACalculate the Predetermined Overhead Rate and Calculate the Overhead Applied

question 127

Essay

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:
$$\begin{array} { l r } \text { Direct materials } & \$ 250,000 \\\text { Direct labor } & 410,000 \\\text { Indirect materials } & 55,000 \\\text { Indirect labor } & 125,000 \\\text { Sales commissions } & 50,000 \\\text { Factory depreciation } & 170,000 \\\text { Property taxes, factory } & 15,000 \\\text { Factory utilities } & 35,000 \\\text { Advertising } & 62,500 \\\text { Factory equipment rental } & 100,000\end{array}$$
(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:

Range

The difference between the lowest and highest values in a set of data, indicating dispersion or variability.

Median

The middle value of a data set when it is arranged in ascending or descending order, or the point that divides the distribution into two equal halves.

Standard Deviation

A statistical measure of the dispersion or variation in a set of values, indicating how much the individual values differ from the mean of the set.

Social Competence

The ability to interact effectively with others, involving communication skills, empathy, and relationship-building.