Question
Easy Decorating uses a job-order costing system to collect the costs of its interior decorating business. Each client's consultation is treated as a separate job.
Easy Decorating uses a job-order costing 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 $936,100
Actual overhead $964,000
Estimated decorator hours 40,700
Actual decorator hours 41,490
The company uses Operating Overhead in place of Manufacturing Overhead.
Calculate the predetermined overhead rate.
Predetermined overhead rate $_________ per decorator hour
Prepare the entry to apply the overhead for the year.(Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Account Titles and Explanation Debit Credit
Determine whether the overhead was under- or over-applied and by how much.
Balance $________ is ______________(Over-applied, Under-applied)
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