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Bravo Company uses a predetermined overhead rate to apply manufacturing overhead to production. The rate is based on direct labor hours.
Beginning of the year estimates for the year just ended were as follows:
Estimated manufacturing overhead .........$240,000Estimated direct labor hours ...........$40,000During the year, Bravo used a total of $37,000 direct labor hours. At the end of the year, Bravo's records revealed the following information:Raw materials inventory ............$35,000Work in process inventory ............$60,000Finished goods inventory ..............$105,000Cost of goods sold ...............$400,000Manufacturing overhead costs incurred ....... $210,000
1. Compute the predetermined overhead rate for the year. 2. Determine the amount of overhead applied to production during the year. 3. The amount of under applied or over applied manufacturing overhead for the year.
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