E4.26 Overapplied or underapplied overhead: manufacturer The following information relates to Amazing Creations Pty Ltd for the year just ended: Budgeted direct labour cost LO4.4 4.6 Actual direct labour cost Budgeted manufacturing overhead Actual manufacturing overhead: 84000 hours @ $22 per hour 80000 hours @ $25 per hour $1050000 $ 250000 21000 85000 Depreciation Property taxes Indirect labour Supervisory salaries Electricity Insurance Factory rent Indirect material (see data below) Indirect material: Beginning inventory, 1 January Purchases Ending inventory, 31 December 208000 47000 26000 291000 64000 $ 60000 84000 80000 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?