Overapplied or underapplied overhead: manufacturer, Cost Accounting

Overapplied or underapplied overhead: manufacturer, Cost Accounting

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Budgeted direct labour cost 75000 hours @ $16 per hour
Budgeted manufacturing overhead 80 000 hours @ $17.50 per hour
Actual direct labour cost $997 500

Budgeted manufacturing overhead
Actual manufacturing overhead:

Depreciation $231 000
Property taxes 21 000
Indirect labour 82 000
Supervisory salaries 200 000
Electricity 59 000
Insurance 30 000
Factory rent 300 000
Indirect material (see data below) 90 000
Indirect material:
Beginning inventory, 1 January 48 000
Purchases 94 000
Ending inventory, 3.1 December 63 000
Required:

1. Calculate the firm''s predetermined overhead rate, which was based on direct labour hours.
2. Calculate the overapplied or underapplied overhead for the year.
3. prepare a journal entry to close the manufacturing overhead account to cost of goods sold''
4. What caused the overapplied or underapplied overhead?

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