The predetermined overhead allocation rate for Millay Manufacturing is based on estimated direct labor costs of $350,000 and estimated factory overhead of $770,000. 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:
Incoming Partner
A new member joining a partnership, bringing capital to the business in exchange for a share of the partnership's profits and losses.
Initial Investment
The amount of money used to start a project, purchase an asset, or invest in a business for the first time.
Withdraws Cash
The process of taking out money from an account, which decreases the account balance.
Partnership Capital
Partnership capital represents the total equity invested by all partners in a partnership firm, reflecting their pooled capital contributions to the business.
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