Tombert Decorating uses a job order cost system to collect the cost of its interior decorating business. Each client's consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below are data for the current year.
| Estimated overhead | $960,000 |
| Actual overhead | $982,000 |
| Estimated decorator hours | 40,000 |
| Actual decorator hours | 40,500 |
The company uses Operating Overhead in place of Manufacturing Overhead
Instructions
- Compute the predetermined overhead rate.
- Prepare the entry to apply the overhead for the year.
- Determine whether the overhead was under or overapplied and by how much.
Solution
