In December 2014, Gomez Companys manager estimated next years total direct labor cost assuming 35 persons working an average of 3000 hours each at an average wage rate of $20 per hour. The manager also estimated the following manufacturing overhead costs for year 2015.

Indirect labor	$	335,200
Factory supervision		165,000
Rent on factory building		156,000
Factory utilities		104,000
Factory insurance expired		84,000
DepreciationFactory equipment		413,000
Repairs expenseFactory equipment		76,000
Factory supplies used		84,800
Miscellaneous production costs		52,000
Total estimated overhead costs	$	1,470,000

At the end of 2015, records show the company incurred $1,843,000 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $620,000; Job 202, $579,000; Job 203, $314,000; Job 204, $732,000; and Job 205, $330,000. In addition, Job 206 is in process at the end of 2015 and had been charged $33,000 for direct labor. No jobs were in process at the end of 2014. The companys predetermined overhead rate is based on direct labor cost.

Required
1.a	Determine the predetermined overhead rate for year 2015.

Predetermined overhead rate

choose numerator / Choose Denominator = predetermined overhead rate

1.b determine tht total overhead cost applied to each of the 6 jobs during 2015

Job no. Direct labor overhead cost applies

201 620000

202 579000

203 314000

204 732000

205 330000

206 33000

total 2,608,000

1.c Determine the over or underapplied overhead at year end 2015

2.

Assuming that any over- or underapplied overhead is not material, prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold at the end of year 2015.

journal entry worksheet

• Record the entry to allocate any overapplied or underapplied overhead to Cost of Goods Sold at the end of year 2015.