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    overhead allocation rate; overhead cost; and journal entries

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    The predetrmiend overhead allocation rate for Forsythe, Inc. is based on estimated $250,000 for direct materials; 410,000 for direct labor; 55,000 for Indirect materials; 125,000 for Indirect labor; 50,000 for sales commission; 170,000 for Factory depreciation; 15,000 for factory property taxes; 35,000 for Factory utilities; 62,5000 for Advertising; and $100,000 for rental of factory equipment. Calculate the predetermined overhead rate allocation rate. Calculate the overhead cost applied during the year. Determine the amount of over- or underapplied overhead. What are the journal entries to eliminate the over -or underapplied overhead assuming that it is not material in amount.

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    Predetermined overhead = Estimated Overhead/Estimated direct labor costs = 500,000/400,000 = 125% of direct labor costs
    Overhead applied = Rate X Actual direct labor costs = 125% X 410,000 = $512,500
    Under or overapplied is the difference between the ...

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