Exercise 15-13 Tombert Decorating uses a job order cost system to collect the co

Question

Exercise 15-13 Tombert Decorating uses a job order cost system to collect the costs 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 Actual overhead Estimated decorator hours Actual decorator hours $960,000 $982,800 40,000 40,500 The company uses Operating Overhead in place of Manufacturing Overhead Compute the predetermined overhead rate. (Round answer to 2 decimal places, eg. 25.55%.) per decorator hour SHOW LIST OF ACCOUNTS LINK TO TEXT VIDEO: SIMILAR EXERCISE VIDEO: APPLIED SKILLS Prepare the entry to apply the overhead for the year. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal place, e.g. 55.) Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS LINK TO TEXT VIDEO: SIMILAR EXERCISE VIDEO: APPLIED SKILLS Determine whether the overhead was under-or overapplied and by how much. Overhead Click if you would like to Show Work for this question:

Explanation / Answer

a) Predetermine overhead rate = 960000/40000 = $24 per decorator hours

b) Journal entry :

3) Under applied overhead = 982800-972000 = $10800

Overhead $10800 Under applied

Date account titles and explanation debit credit Work in process (40500*24) 972000 Operating overhead 972000 (To record overhead applied)

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