In December 2010, Ultravision established its predetermined overhead rate for movies produced during year 2011 by using the following cost predictions: overhead costs, $1,800,000, and direct labor costs, $450,000. At year end 2011, the company’s records show that actual overhead costs for the year are $1,770,000. Actual direct labor cost had been assigned to jobs as follows.
Movies completed and released . . . . . . . . . $400,000
Movies still in production . . . . . . . . . . . . . . 45,000
Total actual direct labor cost . . . . . . . . . . . $445,000

1. Determine the predetermined overhead rate for year 2011.
2. Set up a T-account for overhead and enter the overhead costs incurred and the amounts applied to movies during the year using the predetermined overhead rate.
3. Determine whether overhead is over-applied or under-applied (and the amount) during the year.
4. Prepare the adjusting entry to allocate any over- or under-applied overhead to Cost of Goods Sold.