At the beginning of the year, Pavelka Company’s manager estimated total direct labor cost to be $1,500,000. The manager also estimated the following overhead costs for the year.

For the year, the company incurred $725,000 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 625, $354,000; Job 626, $330,000; Job 627, $175,000; Job 628, $420,000; and Job 629, $184,000. In addition, Job 630 is in process at the end of the year and had been charged $10,000 for direct labor. No jobs were in process at the beginning of the year. The company’s predetermined overhead rate is based on a percent of direct labor cost.

Required 

1. Determine the following. 

a. Predetermined overhead rate for the year. 

b. Overhead applied to each of the six jobs during the year. 

c. Over- or underapplied overhead at year-end. 

2. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold at year-end.

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Indirect labor.... $279,600 Rent on factory building 70,000 Factory utilities ... 78,000 Depreciation-Factory equipment 240,000 Repairs expense-Factory equipment . 30,000 Indirect materials.... 52,400 Total estimated overhead costs..... $750,000