Easy Decorating uses a job-order costing system to collect the costs of its interior decorating business. Each

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Easy Decorating uses a job-order costing system to collect the costs of its interior decorating business. Each client’s consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below are data for the current year:

Estimated overhead                     $920,000
Actual overhead                           $942,800
Estimated decorator hours              40,000
Actual decorator hours                    40,500

The company uses Operating Overhead in place of Manufacturing Overhead.

Instructions
(a) Calculate the predetermined overhead rate.
(b) Prepare the entry to apply the overhead for the year.
(c) Determine whether the overhead was under- or over-applied and by how much.

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Related Book For  book-img-for-question

Managerial Accounting Tools for Business Decision Making

ISBN: 978-1118856994

4th Canadian edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly

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