Pharoah 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 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