Chapter 2, Problem 2.13E

Tombert Decorating uses a job order cost system to collect the costs of its interior decorating business. Each clients 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	$982,800
Estimated decorator hours	40,000
Actual decorator hours	40,500

The company uses Operating Overhead in place of Manufacturing Overhead.

Instructions

(a) Compute the predetermined overhead rate.

(b) Prepare the entry to apply the overhead for the year.

(c) Determine whether the overhead was under- or overapplied and by how much.