Problem:
Brickman Corporation, which began operations on January 1 of the current year, reported the following information:
- Esitmated Manufacturing Overhead $600,000
- Actual manufacturing overhead 639,000
- Estimated direct Labor cost 480,000
- Actual direct labor cost 500,000
- Total debits in the work in process account 1,880,000
- total credits in the work in process account 920,000
Brickman applies manufacturing overhead to jobs on the basis of direct labor cost and adds a 60% markup to the cost of completed production when finished goods are sold. On December 31, job no. 18 was the only job that remained in production. That job had direct-material and direct-labor charges of $16,500 and $36,000, respectively.
Required:
Question 1: Determine the company's predetermined overhead rate.
Question 2: Determine the amount of under- or overapplied overhead. Be sure to label your answer.