Question
Pharoah Decorating uses a job-order costing system to collect the costs of its interior decorating business. Each clients consultation is treated as a separate job.
Pharoah Decorating uses a job-order costing system to collect the costs of its interior decorating business. Each clients 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 costs | $891,000 | ||
Actual overhead costs | $915,600 | ||
Estimated decorator hours | 40,500 | ||
Actual decorator hours | 41,040 |
The company uses Operating Overhead in place of Manufacturing Overhead, and Service Contracts in Process in place of Work in Process Inventory.
Calculate the predetermined overhead rate.
Predetermined overhead rate | $enter the predetermined overhead rate in dollars per decorator hour | per decorator hour |
Prepare the entry to apply the overhead for the year. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Account Titles and Explanation | Debit | Credit |
---|---|---|
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount |
Determine whether the overhead was under- or over-applied and by how much.
Balance | $enter a dollar amount | select an option Over-appliedUnder-applied |
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