The FSR Company uses a budgeted factory overhead rate to apply manufacturing overhead to production. The rate is based on direct labour hours. Estimates for the year 2006 are given below: During 2006 the Paine Company used 60,000 direct labour hours. At the end of 2006, the company's records revealed the following information: a. Calculate the budgeted overhead rate for 2006.
b. Determine the amount of underapplied or overapplied overhead for 2006.
c. If underapplied or overapplied overhead is treated as an adjustment to cost of goods sold, determine the cost of goods sold that would appear on the company's income statement.

Question

The FSR Company uses a budgeted factory overhead rate to apply manufacturing overhead to production. The rate is based on direct labour hours. Estimates for the year 2006 are given below:  During 2006 the Paine Company used 60,000 direct labour hours. At the end of 2006, the company's records revealed the following information:  a. Calculate the budgeted overhead rate for 2006.
b. Determine the amount of underapplied or overapplied overhead for 2006.
c. If underapplied or overapplied overhead is treated as an adjustment to cost of goods sold, determine the cost of goods sold that would appear on the company's income statement.

Quizplus · Accepted Answer

The Answer of The FSR Company uses a budgeted factory overhead rate to apply manufacturing overhead to production. The rate is based on direct labour hours. Estimates for the year 2006 are given below:  During 2006 the Paine Company used 60,000 direct labour hours. At the end of 2006, the company's records revealed the following information:  a. Calculate the budgeted overhead rate for 2006.
b. Determine the amount of underapplied or overapplied overhead for 2006.
c. If underapplied or overapplied overhead is treated as an adjustment to cost of goods sold, determine the cost of goods sold that would appear on the company's income statement.

The FSR Company Uses a Budgeted Factory Overhead Rate to Apply