The predetermined overhead rate for Foster, Incorporated is based on estimated direct labor costs of $400,000 and estimated factory overhead of $500,000. Actual costs incurred were:

Direct materials

$ 240,000

Direct labor

410.000

Indirect materials

55,000

Indirect labor

125,000

Sales commissions

55,000

Factory depreciation 170,000

Property taxes, factory 15,000

Factory utilities

35,000

Advertising

62,500

Factory equipment rental 110,000

1. Calculate the predetermined overhead rate and calculate the overhead applied during the year.
2. Prepare the journal entry to eliminate the over- or underapplied overhead, assuming that it is not material in amount.

Please answer both parts of the question for a good review, thanks!

The predetermined overhead rate for Foster, Incorporated is based on estimated direct labor costs of $400,000 and estimated factory overhead of $500.000. Actual costs incurred were: (a) Calculate the predetermined overhead rate and calculate the overhead applied during the year. (b) Prepare the journal entry to eliminate the over-or underapplied overhead, assuming that it is not material in amount