E4.26 LO 4.4 4.6 Overapplied or underapplied overhead: manufacturer The following information relates to Amazing Creations Pty Ltd for the year just ended: Budgeted direct labour cost Actual direct labour cost Budgeted manufacturing overhead Actual manufacturing overhead: Depreciation Property taxes Indirect labour Supervisory salaries Electricity Insurance Factory rent Indirect material (see data below) Indirect material: Beginning inventory, 1 January Purchases 75000 hours @ $16 per hour $17.50 per hour 80000 hours $997500 $231000 21000 82000 200000 59000 30000 300000 79000 $ 48000 94000 63000 Ending inventory, 31 December Required 1. Calculate the firm's predetermined overhead rate, which was based on direct labour hours. 2. Calculate the overapplied or underapplied overhead for the year. 3. Prepare a journal entry to close the manufacturing overhead account to cost of goods sold. 4. What caused the overapplied or underapplied overhead?