Manufacturing Overhead

BB Ltd allocates manufacturing overhead to work in process based on direct labor

hours. On 1st January of the current year, there were no balance in work in process of

finished goods inventories.

The following estimates were included in the budget for the current year:

Total projected manufacturing overhead $300,000

Total projected direct labor hours 40,000

During January, the firm worked on the following production jobs:

KJ Ltd: 1,600 direct labor hours

DX Ltd: 2,400 direct labor hours

SK Ltd: 1,000 direct labor hours

Actual overhead incurred by BB Ltd amounted to $30,000.

Required:

1. Calculate the company's predetermined overhead rate for the year.

2. How much manufacturing overhead was applied to production?

3. Calculate and journalize the overapplied or underapplied overhead