3-3B - Predetermined Overhead Rate, Overapplied and Underapplied Overhead Jake's Autobody is a car repair shop. The company uses direct labour cost as a basis for applying manufacturing overhead costs to jobs. The company estimates its annual overhead to be $140,000 and it expects employees to work 20,000 hours at an average wage rate of $12 per hour. During the year, employees actually worked 18,000 hours (at a wage rate of $12.25 per hour) and the actual amount spent on overhead was $150,000. Required: a.) Compute the predetermined overhead rate. b.) How much overhead would be applied to jobs during the year? c.) By how much was overhead overapplied or underapplied for the year? 3.4A - Journal Entries of Job Order Costing Intercity Roofing manufactures and installs custom shingles for use on damaged roots of residential houses and apartments. The company uses a specialized manufacturing process to ensure the replacement shingles are an exact match with the existing roof. The company uses a job order costing system to apply manufacturing overhead on the basis of direct labour cost. The company estimates that during the next year it will incur $70.000 in overhead costs and will pay $140,000 in direct labour costs. During the year, the following transactions occurred: a.) Purchased $180,000 of direct materials on account. b.) Purchased $5,000 of supplies on account, (The supplies consisted of glue and cleaning supplies.) c.) Requisitioned S170,000 of direct materials and $4.500 of supplies for use in production d.) Incurred employee costs: i. Direct labour $150,000 ii. Indirect labour Administrative salaries 190,000 iv. Sales salaries 30,000 v. Sales commissions 90,000 e.) Advertised on local television: $5,000 1.) Rent: $12,000. 40% of the space related to sales offices, 60% was a shop used in production of roofing materials. g.) Depreciation: $25,000. 70% relates to roofing equipment, 30% relates to office equipment. h.) Insurance expired: $15,000. 90% relates to the factory, the remainder relates to insurance on the office equipment. 1.) Manufacturing overhead costs were applied to production. j.) Goods costing $375,000 were completed. k.) The company had sales on account of $800,000. According to cost data, the jobs cost $350,000. Required: a.) For items a.)-k.) above, record journal entries. Unless otherwise noted, assume all transactions were on account. b.) Was overhead overapplied or underapplied for the period? By how much? c.) Record a journal entry to close overhead to cost of goods sold. d.) Based on the information above, prepare an income statement for the company - assume a 20% tax rate