Osborn Manufacturing uses a predetermined overhead rate of S19.00 per direct labor hour. This predetermined rate wae based on a cost formula that estimates $243,200 of total manufacturing overhead for an estimated activity level of 12 800 direct labor-hours The company actually incurred $241,000 of manufacturing overhead annd 12,300 direct labor-hours during the period Required: 1. Determine the amount of underapplied or overapplied manufecturing averhead for the period. 2. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the journal entry to dis pose of the underapplied or overapplied overhead increase or decrease the company's gross margin? By how much? 1 Manufacturing overhead underappled by 2 The gross margin would decrease

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Osborn Manufacturing uses a predetermined overhead rate of S19.00 per direct labor hour. This predetermined rate wae based on a
cost formula that estimates $243,200 of total manufacturing overhead for an estimated activity level of 12 800 direct labor-hours
The company actually incurred $241,000 of manufacturing overhead annd 12,300 direct labor-hours during the period
Required:
1. Determine the amount of underapplied or overapplied manufecturing averhead for the period.
2. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the journal entry to
dis pose of the underapplied or overapplied overhead increase or decrease the company's gross margin? By how much?
1 Manufacturing overhead underappled
by
2 The gross margin would decrease
Transcribed Image Text:Osborn Manufacturing uses a predetermined overhead rate of S19.00 per direct labor hour. This predetermined rate wae based on a cost formula that estimates $243,200 of total manufacturing overhead for an estimated activity level of 12 800 direct labor-hours The company actually incurred $241,000 of manufacturing overhead annd 12,300 direct labor-hours during the period Required: 1. Determine the amount of underapplied or overapplied manufecturing averhead for the period. 2. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the journal entry to dis pose of the underapplied or overapplied overhead increase or decrease the company's gross margin? By how much? 1 Manufacturing overhead underappled by 2 The gross margin would decrease
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