Tomek Company uses a job costing system that applies factory overhead on the basis of direct labor hours. The companys factory overhead budget for the current year included the following estimates:

Budgeted total factory overhead	$	980,000
Budgeted total direct labor hours		70,000

At the end of the year, the company shows these results:

Actual factory overhead	$	992,250
Actual direct labor hours		70,500

Required:

1. Compute the firms predetermined factory overhead rate for the current year.

2. Calculate the amount of overapplied or underapplied overhead.

3. Prepare a journal entry to transfer the underapplied or overapplied overhead to the Cost of Goods Sold account.

Complete this question by entering your answers in the tabs below.

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• Required 2
• Required 3

Compute the firms predetermined factory overhead rate for the current year.

Predetermined factory overhead rate

per direct labor hour