Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 32

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

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

Required
1. Compute the firm's 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.