At the beginning of the year, Jamila Jams Industries (a leading manufacturer of novelty children’s pajamas) determined that estimated overhead costs would be $725,000, while actual overhead cost for the year totaled $762,000. Furthermore, it was determined that the estimated allocation basis would be 29,000 direct labor hours, while direct laborers actually worked 28,000 hours.

1. What is the predetermined overhead rate?

2. How much overhead was allocated for the year?

3. How much was over- or underallocated overhead for the year?

At the end of the year Jamila Jams has the following ending balances (before any adjusting entries):

Work in Process Inventory $ 46,020

Finished Goods Inventory $ 115,050

Cost of Goods Sold $2,139,930

4. If Jamila adjusts their accounts using the proration approach, what are the adjusted ending balances for Work in Process Inventory, Finished Goods Inventory and Cost of Goods Sold?

5. If Jamila adjusts their accounts using the write-off approach, what are the adjusted ending balances for Work in Process Inventory, Finished Goods Inventory and Cost of Goods Sold?