Problem 4

Tub-Tub's Tub Co. uses predetermined overhead rates to allocate manufacturing overhead to various jobs. The allocation base is machine hours. The following data is for 2016:

Estimated Actual

Direct materials $ 710,000 $ 682,000

Direct labor hours 37,000 35,000

Direct labor cost $ 621,000 $ 547,000

Machine hours 125,000 132,000

Manufacturing overhead $ 890,000 $ 958,000

Compute the firm's predetermined overhead rate.

For 2016, was overhead over- or under-applied and by how much?

For 2016, what amount was recorded to Work-in-Process for manufacturing overhead?