Pure Decorating uses a job order cost system to collect the costs of its interior decorating business.
Question:
Pure Decorating uses a job order cost 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) Compute the predetermined overhead rate.
(b) Prepare the entry to apply the overhead for the year.
(c) Determine whether the overhead was under- or overapplied and by how much.
AppendixLO1
Step by Step Answer:
Accounting Tools For Business Decision Making
ISBN: 9781118771112
5th Edition
Authors: Kimmel, Wetlands, Kieso