Calculate and Use Overhead Rate Selected data for the consulting department of Kingman Consulting, Inc., follow:

Estimated consulting overhead cost for the year . . . . . . . . . . . . . . . . $486,000

Estimated direct labor cost for the year (@ $9/hr.) . . . . . . . . . . . . . . . 324,000

Actual consulting overhead cost for May . . . . . . . . . . . . . . . . . . . . . . 29,000

Actual direct labor cost for May (2,400 hrs.) . . . . . . . . . . . . . . . . . . . . 22,000

Assuming that direct labor cost is the basis for applying consulting overhead,

a. Calculate the predetermined overhead rate.

b. Prepare a journal entry that applies consulting overhead for May.

c. By what amount is consulting overhead over- or underapplied in May?

E3-7B. Calculate and Use Overhead Rate Using the data in Exercise E3-6B, but assuming that the basis for applying consulting overhead is direct labor hours, complete requirements (a) through (c).