The predetermined overhead allocation rate for Forsythe, Inc., is based on estimated direct labor costs of $400,000 and estimated factory overhead of $500,000. Actual costs incurred were:
* Direct materials $250,000
*Direct Labor $410,000
Indirect materials 55,000
indirect labor 125,000
sales commissions 50,000
factory depreciation 170,000
property taxes, factory 15,000
factory utilies 35,000
Advertising 62,500
Factory equipment rental 100,000
a) Calculate the predetermined overhead allocation rate (show calculation)
b) Calculate the overhead cost applied during the year (show calculations)
c) Determine the amout of over- or underapplied overhead (show calculation)
d) Prepare the journal entry to eliminate the over- or underapplied overhead assuming that it is not material in amount. (show calculation)