Chapter 15, Problem 4PSB

1.

To determine

To compute:

The predetermined overhead rate.

b.

To determine

To compute:

The total overhead cost applied.

c.

To determine

To compute:

The over or under applied overhead.

Explanation:

Actual overhead is $1,500,000. (Given)

Applied overhead is 1,506,200. (Calculated)

Formula to calculate the under applied goods:

$\text{Over}\text{applied}\text{goods}=\text{Actual}\text{overhead}-\text{Applied}\text{overhead}$

Substitute $1,500,000 for actual overhead and $1,506,200 for applied overhead.

$\begin{array}{c}\text{Over}\text{applied}\text{overhead}=\$1,500,000-\$1,506,200\\ =\left(\$6,200\right)\end{array}$

Hence, the over applied overhead is $6,200.

2.

To determine

To prepare:

The journal entry.