Syarikat Aman Sdn Bhd (SASB) manufactures leather products for the local market.

At the beginning of the year 2018, SASB estimates the following costs:

Manufacturing overhead costs$ 498,750

Direct labor cost $ 600,000

The following are information related to the production in 2018:

Direct labor $ 640,000

Depreciation $ 120,000

Property tax $ 6,000

Supervisor salary $ 100,000

Utilities $ 29,500

Insurance $ 15,000

Rental of space $ 150,000

Indirect labor $ 41,000

Indirect material :

Inventory at January 2017 $ 24,000

Purchase during the year $ 47,000

Inventory at December 2017 $ 31,500 T

he price per unit for direct material is estimated at $ 5 per unit and direct labor rate per unit is $ 16 per hour. The accountant informed that this amount is similar for both budgeted and actual costs.

REQUIRED:

(a) Calculate the pre-determined overhead rate for SASB using direct labor hour as a basis.

(b) Calculate the under-applied or over-applied overhead.

(c) Prepare a journal entry to close the overhead variance to the cost of goods sold.