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Overapplied or Underapplied overhead
At year-end 2010, Dub's Wind Generator Co. had a $40,000 debit balance in its Manufacturing Overhead Control account. Overhead is applied to products based on direct labor cost. Relevant account balance information at year-end given: a. Find what predetermined OH rate was used in the year? ___ % of direct labor cost b. Give arguments to be used for deciding whether to prorate the balance in the overhead account at year-end. c. Prorate overhead account balance based on relative balances of appropriate accounts. Work in Process Inventory $ ___ Finished Goods Inventory $ ___ Cost of Goods Sold $ ___ Total $ ___ d. Find some possible reasons that company had a debit balance in overhead account at year-end.
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