1. XYZ Products, Inc. computes its predetermined overhead rate annually of the basis of direct labor hours. At the beginning of the year, they estimated that total manufacturing overhead would be $1,000,000 and the total direct labor would be 20,000 hours.

1. Please compute the companys predetermined overhead rate to be used during the course of the year.

2. At the end of the year, actual manufacturing overhead was $950,000 and actual direct labor was 22,500 hours. Please reconcile the Manufacturing Overhead account and prepare the appropriate journal entry to close the account. Was manufacturing overhead over- or under-applied?